Rachel Reeves pledges to 'make UK better off' as she arrives in China

The UK Treasury stated that, amidst turmoil in the UK's domestic financial markets, the Chancellor's visit to China will "primarily" focus on improving the living standards of the British working people. The trip aims to explore trade and investment opportunities to achieve the government's main goals of developing the UK economy and raising living standards. However, the visit is overshadowed by soaring UK borrowing costs, which have reached a 16-year high, and a depreciating pound.

The Conservative Party has accused the Chancellor of "fleeing to China," but the government has defended the visit. Culture Secretary Lisa Nandy stated that rising borrowing costs are a "global trend affecting economies around the world," and the Treasury has ruled out any emergency intervention in the markets. Governments typically spend more than they receive in tax revenue and therefore borrow to cover the shortfall, often by selling bonds to investors. However, UK borrowing costs have been rising in recent months, with 10-year borrowing costs reaching their highest level since 2008 this week, and the pound also falling below $1.22 on Friday.

Market volatility presents potential problems for the Chancellor, who has pledged not to borrow for day-to-day spending and to reduce debt as a proportion of national income by the end of this parliament. Furthermore, the UK economy is stagnating, and businesses are also bracing for tax increases that will take effect in April. The Treasury stated that the Chancellor's visit to China fulfills the commitment made last year by Prime Minister Keir Starmer and Chinese President Xi Jinping to "explore deeper economic cooperation." China is the world's second-largest economy and the UK's fourth-largest single trading partner. According to the Treasury, exports to China supported more than 455,000 jobs in the UK in 2020.

Officials have stated that the Chancellor will also raise "difficult issues" with Chinese Vice Premier He Lifeng, including urging China to cease its "material and economic support" for Russia's war in Ukraine, and expressing concerns about human rights and freedoms in Hong Kong. In a statement, the Chancellor said, "By finding common ground on trade and investment, while being candid about our differences, and with maintaining national security as the government’s first duty, we can build a long-term economic relationship with China that is in the national interest."

During the visit to Beijing, the Chancellor will also visit the flagship store of bicycle manufacturer Brompton, which the Treasury described as "a major UK export success story to China." In addition to expanding existing financial services trade in Shanghai, the government stated that talks will look at "removing" barriers faced by UK firms when trying to export to or expand in China. The Chancellor will be accompanied by Bank of England Governor Andrew Bailey, Financial Conduct Authority CEO Nikhil Rathi, and senior representatives from some of the UK's largest financial services companies. Furthermore, the visit comes after MPs questioned the supply chain of Chinese fashion retailer Shein and allegations of forced labor and human rights abuses. Shein has denied these allegations.

On Tuesday, a senior lawyer representing Shein repeatedly refused to answer whether the company sells products containing cotton from the Xinjiang region, where China has been accused of using forced labor against Uyghur Muslims.