Rachel Reeves wants to rebuild the City of London’s links with China

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Rachel Reeves wants to breathe new life into the policy linking London and Shanghai stocks, as she referred to financial services as an “emergency” in Britain’s economic relationship with China on Saturday.

The Chancellor will argue for greater cooperation between Britain and China on bonds, pensions and capital markets as well as asset management as he seeks to restart talks after a hiatus of more than five years in high-level UK visits to of that country.

The UK government sees an opportunity to boost financial services ties with China as Donald Trump prepares to become US president after vowing to take a tougher line with Beijing, according to financiers on the trip. that.

However, Reeves’ plans for a three-day visit to Beijing and Shanghai have been overshadowed by the sell-off in bond markets that this week pushed Britain. borrowing costs at their highest level since the financial crisis of 2008. Conservative opposition politicians called on him to cancel the trip.

“We see the economic problems Rachel Reeves has created, and the consequences of her poor Budget continue to bite. Yet the irony is that she made the choice to get on a jet instead of sit and try to hold on,” said shadow councilor Mel Stride.

He added: “The Chancellor needs to come back, and come back to the UK quickly.”

Speaking before the trip, Reeves he said he would find “common ground in trade and investment while being transparent about our differences and keeping national security as the first task of this government”.

He added: “We can build for a long time the economy a relationship with China that works for the country. ”

The City of London is suffering from a lack of initial public offerings amid a steady flow of UK-listed companies taking their listings overseas or going private.

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

Shein, the Chinese fast fashion retailer, filed confidential documents with UK and Chinese regulators last year for a London IPO with a proposed market capitalization of £50bn.

This has raised hopes among investors that other Chinese companies may follow suit, despite controversy surrounding allegations that Shein uses forced labor as part of its cotton supply. from the Xinjiang region of northwest China.

Financial Conduct Authority chief executive Nikhil Rathi is accompanying Reeves on the three-day visit and may discuss Shein’s listing plans with his counterparts in Beijing. David Schwimmer, chief executive of the London Stock Exchange, is also part of the delegation.

Reeves saw the meetings as an opportunity to boost exports of financial services to China, which are currently a fraction of those to the US and EU, officials said.

The Shanghai-London stock link was launched with much fanfare in 2019 but has struggled to gain traction since then. It was intended to encourage Chinese and British companies to list their shares in other countries.

But this was done by only six Chinese companies, raising $ 6.6bn, while the business was quiet. No UK companies have done so. The Chancellor hopes to facilitate two such deals between the UK and China.

The visit marks the revival of the China-UK Economic and Financial Dialogue, an annual group of bilateral talks that has been suspended since 2019 due to the Covid-19 pandemic and worsening diplomatic relations.

During his visit, Reeves will visit the Beijing store of UK bicycle manufacturer Brompton and meet with executives from other British companies in China, including Jaguar Land Rover, Unilever and Diageo.

HSBC chairman Mark Tucker, who heads the business delegation, and Standard Chartered chairman José Viñals are among the City of London bankers with a big China presence this week.

Bank of England Governor Andrew Bailey is also on the trip, along with Baroness Shriti Vadera, chairman of insurer Prudential, Sir Douglas Flint, chairman of fund manager Abrdn, and Richard Oldfield, head of asset manager Schroders .