Making UK better off at ‘forefront of Reeves’ mind’ on China visit, Treasury says

Making Britain better off will be “at the forefront of the Chancellor’s mind” as she visits China, the Treasury said following opposition criticism of her decision to push ahead with the trip amid turbulence in the financial markets.

Rachel Reeves will meet her counterpart He Lifeng in Beijing on Saturday to discuss trade and investment as well as raising “difficult issues” including the country’s support for Russia’s war in Ukraine, the department said.

The talks with China’s vice premier have been planned for the new year as part of the Government’s move to resume high-level engagement with the country, following Sir Keir Starmer’s meeting with leader Xi Jinping in November.

Overshadowed

The trip has been overshadowed by concerns over a rise in Government borrowing costs after yields on UK bonds surged to the highest level since the 2008 financial crisis.

The Tories have accused the Chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.

The cost of long-term government borrowing climbed again on Friday, sitting just below the historic highs reached in recent days.

The yield on 30-year gilts briefly touched 5.43%, just below the peak of Thursday’s sell-off, which was the highest point since 1998.

Meanwhile, yields on 10-year gilts reached 4.87% on Friday, slightly below their post-2008 highs seen earlier this week.

Both eased back later in the morning, but remained at the elevated levels seen over the last few days.

Bond yields move inversely to prices, meaning that when they rise it becomes more expensive for governments to borrow money.

Long-term economic relationship

Ahead of her meeting with Mr He, the Chancellor said her visit was part of efforts to build a long-term economic relationship with China that “works in the national interest”.

“Growing the economy and raising living standards is front and centre of this government’s plan for change,” Ms Reeves said.

“That growth must be secure, resilient, and built on stable foundations, including through careful pragmatic cooperation with international partners.

“By finding common ground on trade and investment while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”

The Treasury added that “making working people across Britain secure and better off” would be “at the forefront of the Chancellor’s mind while in Beijing this weekend”.

The Chancellor will be joined by Bank of England governor Andrew Bailey, chief executive of the Financial Conduct Authority Nikhil Rathi and senior representatives from some of Britain’s biggest financial services firms on the trip.

While in the country’s capital, she will visit British bike brand Brompton’s flagship store before heading to Shanghai for talks with representatives across British and Chinese businesses.

The UK Government has said its “reset” of relations with Beijing comes with the “firm recognition” that the two countries “will not, and do not, always agree”.

It has promised to “challenge” Mr Xi’s administration where necessary amid long-standing human rights concerns about the treatment of Uighur Muslims, constraints on freedoms in Hong Kong and its support for Russia’s war in Ukraine.

Downing Street previously said Foreign Secretary David Lammy would put the treatment of the Uighur community to the Chinese government in bilateral discussions, but no mention has been made of the issue being raised on the latest trip.

Asked whether it would be on the agenda for Ms Reeves’ visit, Number 10 said that “ministers will raise issues around human rights, Hong Kong, China’s support for Russia’s illegal war in Ukraine, and the Chancellor’s engagement will be no different”.

The Treasury said she would “urge China to stop its material and economic support for the Russian war effort in Ukraine” as part of a “candid discussion on issues where our views differ”.