Rachel Reeves seeks to revive City of London links with China

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Rachel Reeves wants to breathe new life into a project linked to the London and Shanghai stock exchanges, as she touted financial services as the “highlight” of Britain’s economic relationship with China on Saturday.

The chancellor will argue for greater co-operation between Britain and China on bonds, pensions and capital markets as well as asset management as she seeks to restart dialogue after a hiatus of more than five years with top-level UK visits to the country.

The UK government is sensing an opening to boost financial services ties with China as Donald Trump prepares to become US president after vowing to take a tough line with Beijing, according to financiers briefed on the trip.

However, Reeves’ preparations for a three-day visit to Beijing and Shanghai have been overshadowed by the sell-off in bond markets that has rocked Britain this week. Borrowing costs at their highest level since the 2008 financial crisis. Opposition conservative politicians called on him to cancel the visit.

“We’re witnessing an economic mess of Rachel Reeves’ own making, the impact of her disastrous budget continues to bite. Yet surprisingly he chose to get on a jet rather than stay and try to get a grip,” said Shadow Chancellor Mel Stride.

“The chancellor should turn around and go back to the UK as a matter of urgency,” he added.

Speaking before the tour, Reeves He said he would “find common ground on trade and investment by being frank about our differences and upholding national security as the first duty of this government”.

He added: “We can build a long-term one economic A relationship with China that serves 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 to other countries 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 instead if relations between Washington and Beijing sour.

Shin, the Chinese online fast-fashion retailer, filed confidential documents with UK and Chinese regulators last year to launch an initial public offering in London with a planned market value of £50bn.

This has raised hopes among financiers that other Chinese companies may follow suit, despite controversy over allegations that Shen uses forced labor as part of its cotton supply from China’s northwestern Xinjiang region.

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

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

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

But it did only six Chinese companies, to raise $6.6 billion, when the UK companies stopped trading. The chancellor hopes that such a dual listing between the UK and China will be easier.

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

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

HSBC chair Mark Tucker, leading the business delegation, and Standard Chartered chair Jose Vinales are among senior City of London bankers who have significant Chinese operations with him this week.

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