Chancellor Reeves has defended her visit to China, emphasising the need to grow the UK economy and raise living standards. Critics question the timing as UK borrowing costs hit a 16-year high and the pound falls.
UK Chancellor Rachel Reeves has reaffirmed her economic priorities during a contentious visit to China, where she met Vice-Premier He Lifeng to discuss trade and investment opportunities. Reeves’ trip comes amid mounting economic challenges at home, including surging borrowing costs and a falling pound, which have fueled criticism from opposition parties.
Reeves, speaking at the Beijing store of UK bike manufacturer Brompton, stated that her government’s economic strategy remains unchanged. “The fiscal rules laid out in the Budget are non-negotiable. Economic stability is the bedrock for economic growth and prosperity,” she said.
Economic Pressures at Home
The visit coincides with UK borrowing costs reaching their highest levels since 2008, as 10-year bond yields surged. Meanwhile, the pound dipped below $1.22, adding to concerns over stagnant economic growth and looming tax increases set for April.
These market challenges threaten Reeves’ commitment to her fiscal rules, including avoiding borrowing for day-to-day spending and reducing debt as a share of national income by the end of the current parliament.
Balancing Trade and Diplomacy
Reeves’ visit aligns with a broader government push to deepen economic ties with China, the world’s second-largest economy and the UK’s fourth-largest single trading partner. UK exports to China supported over 455,000 jobs in 2020, according to Treasury figures.
“Growth is the number one mission of this government. Economic stability is the bedrock for economic growth and prosperity.” – Rachel Reeves, UK Chancellor
Accompanied by Bank of England Governor Andrew Bailey and senior financial executives, Reeves is exploring ways to expand trade in financial services and reduce barriers for British businesses operating in China.
However, the trip also addresses sensitive issues, including urging China to cease support for Russia’s war in Ukraine and addressing human rights concerns in Hong Kong. Reeves said: “We need to make sure we have a pragmatic and good relationship with countries around the world. That is in our national interest.”
Human Rights Scrutiny
The visit follows heightened scrutiny of Chinese-founded retailer Shein, accused of forced labor in its supply chains. A senior Shein lawyer recently declined to confirm whether the company uses cotton from Xinjiang, a region linked to alleged Uyghur human rights abuses.
The Treasury acknowledged these challenges, emphasizing that Reeves would confront difficult issues while seeking economic cooperation.
Critics Respond
The timing of Reeves’ visit has drawn criticism, with Conservatives accusing her of leaving the UK during a period of economic uncertainty. Nonetheless, the Treasury defended the trip, citing its alignment with commitments made by Prime Minister Sir Keir Starmer and Chinese President Xi Jinping to explore deeper economic ties.
As Reeves continues her diplomatic engagements in China, she faces the dual challenge of fostering international trade while addressing domestic economic turbulence and political opposition.