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Rachel Reeves wants to breathe new life into plans to link the London and Shanghai stock exchanges, as she on Saturday made financial services a “highlight” for Britain’s economic ties with China.
The chancellor will argue for greater cooperation between Britain and China on bonds, pensions and capital markets, as well as asset management, in a high-level visit to the country to restart talks after more than five years.
The UK government felt an opening to boost financial services ties with China after Donald Trump vowed to take a tougher stance with Beijing, financial experts said on the trip.
However, Reeves’ three-day trip to Beijing and Shanghai has been overshadowed by a bond market sell-off that has pushed Britain this week. Borrowing costs to their highest levels since the 2008 financial crisis. Opposition conservative politicians called for her to cancel the trip.
“Rachel Reeves’ self-made and disastrous budget continues to bite us as we witness economic chaos. But rather than stay and try to catch up, she surprisingly chose to board a jet, said shadow chancellor Mel Stride.
He added: “The chancellor must step right back and return to the UK immediately.”
Speaking before the trip, Reeves “Being clear about our differences and maintaining national security is the first task of this government,” he said, “finding common ground on trade and investment.”
She added: “We can build for the long term economic A relationship with China that works in the national interest.
The City of London is suffering from a lack of initial public offerings amid a steady stream of UK-listed companies moving their listings overseas or going private.
Bank officials hope that if relations between Washington and Beijing worsen, Chinese companies that have previously sought to list in the U.S. may choose to sell shares in London.
Chinese online fast fashion retailer Shane filed confidential documents with UK and Chinese regulators for an initial public offering in London last year at a proposed market value of £50bn.
This has raised hopes among financiers that other Chinese companies may follow suit, despite controversy over allegations that Shein uses forced labor as part of its cotton supply from China’s northwestern Xinjiang province.
Financial Conduct Authority chief executive Nikhil Rathi will accompany Reeves on the three-day trip, where he may discuss Shin’s detailed plans with his counterparts in Beijing. London Stock Exchange CEO David Schwimmer is part of the delegation.
Reeves sees the meetings as an opportunity to strengthen exports of financial services to China, as few of them are currently exported to the United States and the European Union, officials said.
The Shanghai-London stock link launched with great fanfare in 2019 but has since struggled to gain traction. It was to encourage Chinese and British companies to list their shares in each other’s country.
But this was done by only six Chinese companies, to raise $6.6 billion, anno UK companies, while trading was closed. The chancellor hopes to ease double listings between the UK and China.
The visit marks the revival of China-UK economic and financial dialogue, which has been suspended since 2019 due to both the Covid-19 pandemic and the worsening of diplomatic ties.
During her visit, Reeves will visit the Beijing store of UK bicycle manufacturer Brompton and meet executives from other British companies in China, including Jaguar Land Rover, Unilever and Diageo.
HSBC chairman Mark Tucker, leading the business delegation, and Standard Chartered chairman Jose Vinales are among the top City of London bankers with China operations to attend this week.
Bank of England Governor Andrew Bailey is on the trip, along with Baroness Sriti Vadera, chairman of insurer Prudential, Sir Douglas Flynn, chairman of fund manager Aberdeen, and Richard Oldfield, head of asset manager Schroders.
