Rachel Reeves pledges to 'make UK better off' on China visit

The UK Treasury stated that despite criticism of the Chancellor's decision to visit China, the trip will have "making life better for working people in Britain" as its "primary" consideration. Chancellor Rachel Reeves will meet with her Chinese counterparts in Beijing this weekend to discuss trade and investment opportunities as part of efforts to boost the UK economy and improve living standards.

The visit has been overshadowed by UK borrowing costs hitting a 16-year high and a decline in the value of the pound, with Conservatives accusing Reeves of "fleeing to China." While visiting the Beijing store of British bicycle manufacturer Brompton, Reeves stated that she would not change her economic plans. "Growth is this government's number one priority," she said. "The fiscal rules set out in the budget are non-negotiable. Economic stability is the bedrock of growth and prosperity."

However, market volatility could present potential problems for Reeves if she wants to achieve her self-imposed fiscal rules. She has pledged not to borrow to fund day-to-day spending and to get debt as a proportion of national income falling by the end of this parliament. Governments typically spend more than they raise in taxes, so they borrow to make up the difference by selling bonds to investors. But in recent months, the UK’s borrowing costs have been rising, with the cost of borrowing for 10 years reaching its highest level since 2008 this week. The pound also fell below $1.22 on Friday.

The market turmoil comes as the UK economy is stagnating, and businesses are also preparing for a tax increase that will come into effect in April. The Treasury said that Reeves' visit to China fulfills a commitment made last year between UK 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 over 455,000 UK jobs in 2020.

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

In addition to expanding existing financial services trade in Shanghai, the government stated that the talks will also look at "reducing" barriers faced by UK firms when trying to export to or expand in China. The Governor of the Bank of England, Andrew Bailey, the Chief Executive of the Financial Conduct Authority, Nikhil Rathi, and senior representatives from some of the UK's biggest financial services companies will accompany Reeves on the visit. However, the visit also comes after MPs raised questions about the supply chains of Chinese fashion retailer Shein, following allegations of forced labor and human rights abuses. Shein has denied the 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 carrying out forced labor against Uyghur Muslims.