Rachel Reeves seeks to restore the City of London’s links with China

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Rachel Reeves wants to breathe new life into plans to link the London and Shanghai stock exchanges, as she sees financial services as a “highlight” in Britain’s economic relationship with China during her trip. Visits begin on Saturday.

The Prime Minister will argue for greater cooperation between the UK and China in bonds, pensions and capital markets as well as wealth management as she seeks to restart dialogue after a more than five-year break in visits UK’s highest-level visit to the country.

According to financiers briefed on the trip, the British government senses an opportunity to strengthen financial services ties with China as Donald Trump prepares to become US president after he promised to adopt a stance tougher with Beijing.

However, Reeves’ preparations for a three-day visit to Beijing and Shanghai were overshadowed by a bond market sell-off this week that pushed the Brits into action. borrowing costs to the highest level since the 2008 financial crisis. Opposition conservative politicians called on her to cancel the trip.

“We are witnessing an economic chaos of Rachel Reeves’s own making, with the effects of her disastrous Budget continuing to hit hard. However, what is astonishing is that she chose to get on a jet rather than stay and try to get a grip,” shadow chancellor Mel Stride said.

He added: “The Prime Minister should turn around immediately and return to the UK urgently.”

Reeves said on Saturday after arriving in Beijing that the fiscal rules set out in her Budget in October were “non-negotiable”.

The prime minister, who visited the Beijing store of British bicycle maker Brompton, said in comments reported by Reuters that she came to China “to bring tangible benefits to British businesses export and trade around the world to ensure that we have greater access to a second market.” largest economy in the world”.

Speaking before the trip, Reeves said she would find “common ground on trade and investment while being candid about our differences and protecting national security as the first duty of this government.”

“We can build a long-term relationship,” she added economic relationship with China works in the national interest.”

The City of London is facing a dearth of initial public offerings amid a steady flow of UK-listed companies moving their listings across the country. other or switch to private mode.

Banking executives hope Chinese companies that previously wanted to list in the US may choose to sell shares in London if relations between Washington and Beijing deteriorate.

Shein, the Chinese online fast fashion retailer, filed confidential documents with British and Chinese regulators last year seeking an IPO in London at an expected market valuation. is 50 billion pounds.

This has raised hopes among financiers that other Chinese companies could follow, despite controversy over allegations that Shein used forced labor to supply cotton from the western Xinjiang region northern China.

Financial Conduct Authority chief executive Nikhil Rathi will accompany Reeves on the three-day trip and may discuss plans to list Shein with his counterparts in Beijing. David Schwimmer, chief executive of the London Stock Exchange, was also in the delegation.

Reeves sees the meetings as an opportunity to increase financial services exports to China, as they are currently only a fraction of those to the US and EU, officials said.

The Shanghai-London Stock Connect was launched with much fanfare in 2019 but has struggled to gain traction since then. It aims to encourage Chinese and British companies to list their shares in each other’s countries.

But this was done by just six Chinese companies, raising $6.6 billion while trading activity was muted. No British company does so. The Prime Minister hopes to make such dual listings between the UK and China easier.

The visit marks the revival of the China-UK Economic and Financial Dialogue, a series of annual bilateral talks that have been suspended since 2019 due to the Covid-19 pandemic and diplomatic relations have deteriorated. worse.

During his visit, Reeves will also meet with executives from other British companies with a presence in China, including Jaguar Land Rover, Unilever and Diageo.

HSBC chairman Mark Tucker led the business delegation and Standard Chartered chairman José Viñals were among senior City of London bankers with major operations in China accompanying her during the week This.

Bank of England Governor Andrew Bailey was also on the trip along with Baroness Shriti Vadera, chairman of insurance company Prudential, Sir Douglas Flint, chairman of fund management company Abrdn and Richard Oldfield, head of insurance company Prudential. Schroders Property Management.