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UK Finance Minister To Begin China Visit Amid Govt Bond Crisis
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British finance minister Rachel Reeves will begin a visit to China on Saturday, seeking to revive dialogue with the world’s number two economy in the shadow of financial tumult back home.
Reeves, whose formal title is Chancellor of the Exchequer, is the most senior British government official to visit China since then-prime minister Theresa May held talks with President Xi Jinping seven years ago.
Reeves’s trip comes after soaring government borrowing costs in the UK this week cast another shadow over the ruling Labour Party’s sputtering efforts to revitalise growth.
On Thursday, the yield on the UK government’s 10-year bonds rose to their highest level since the 2008 global financial crisis, increasing the risk that the government will have to cut spending or hike taxes to fund current operations and repay its debt.
A spokesperson for Prime Minister Keir Starmer said Reeves had not planned to cancel her “long-standing” China trip despite calls from the parliamentary opposition to stay home and face the crisis.
“The Chancellor is set to visit China to boost the reset relationship with China on trade and investment,” the spokesperson said.
Reeves is expected to meet her Chinese counterpart, He Lifeng, during economic and financial talks in Beijing on Saturday.
They may seek to revive long-suspended annual trade and investment dialogue and discuss avenues for cooperation, potentially including financial services.
China’s foreign ministry said Friday that the two sides would “open discussions on macroeconomic policy and economic globalisation, trade and investment, industrial cooperation, financial market development and cooperation on financial regulation”.
“China and the UK strengthening economic and financial cooperation accords with the two countries’ interests… and will add certainty and inject new momentum into the development of the global economy,” ministry spokesman Guo Jiakun said at a regular news briefing.
The governor of the Bank of England and the chief executive of the UK’s Financial Conduct Authority are also taking part in the visit.
In a sign of the thorny nature of ties, a Starmer spokesperson said Reeves was prepared to raise the topic of human rights.
Starmer has sought to reset the UK’s diplomatic relationship with China after tensions rose under his Conservative predecessors over trade, human rights and Beijing’s crackdown in the former British colony of Hong Kong.
Starmer in November became the first British prime minister to meet Xi since 2018, when the pair spoke at the G20 summit in Brazil.
But trust is fragile following claims that a Chinese businessman used his links with Britain’s Prince Andrew to spy for the Communist Party, an allegation Beijing has dismissed as “preposterous”.
On Thursday, British Foreign Secretary David Lammy fleshed out London’s doctrine of “progressive realism” in managing ties with the Asian powerhouse.
The approach involves “pragmatic engagement to cooperate with China where we can, such as on trade, climate, global health or AI regulation”, Lammy said.
But he added that Britain would “challenge (China) where there are clear threats”, such as by sanctioning companies that aid Russia’s invasion of Ukraine, pushing for the release of Hong Kong democracy advocate Jimmy Lai and calling for an end to human rights abuses in Xinjiang, where Beijing is accused of a sweeping crackdown on Muslim minorities.
“We will engage with China. We have to challenge them not to throw their lot in with (Vladimir) Putin,” Lammy said.
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