Improving the lot of British workers will be at the forefront of the Chancellor’s concerns during her visit to China, the Treasury said, following criticism of the trip amid difficulties in the nation’s financial markets.
Rachel Reeves will meet her counterpart in Beijing this weekend to explore trade and investment opportunities in a bid to achieve the Government’s main aim of growing the UK economy to raise living standards.
However, his visit was overshadowed by Britain’s borrowing costs hitting a 16-year high and the fall in the value of sterling.
Conservatives accused Reeves of “fleeing to China,” but the government defended his trip.
Culture Secretary Lisa Nandy said rising borrowing costs were “a global trend we have seen affecting economies around the world”, while the Treasury ruled out any emergency intervention in the markets .
Governments typically spend more in taxes than they collect and so borrow money to cover the deficit, usually by selling bonds to investors.
But borrowing costs in the UK have risen in recent months and this week the cost of 10-year borrowings hit its highest level since 2008. Sterling also fell below $1.22 on Friday.
Market movements create a potential problem for Reeves if she wants to follow her self-imposed budget rules. She has pledged not to borrow to finance daily expenses and to reduce debt as a percentage of national income by the end of this legislature.
The market turmoil also comes as growth in the British economy stagnates and businesses prepare for tax hikes due to take effect in April.
The Treasury said Reeves’ visit to China fulfilled “the commitment to explore deeper economic cooperation” between Prime Minister Sir Keir Starmer and President Xi, made last year.
China is the world’s second largest economy and the United Kingdom’s fourth largest trading partner. Exports to the country supported more than 455,000 jobs in the UK in 2020, according to the Treasury.
But officials said the chancellor would also raise “difficult questions” with her counterpart, Vice Premier He Lifeng, including urging China to stop its “material and economic support” for Russia’s war against China. Ukraine, as well as expressing concerns about the rights and freedoms of the people. in Hong Kong.
“By finding common ground on trade and investment while being frank about our differences and making national security the first duty of this government, we can build a long-term economic relationship with China that works in national interest,” Reeves said in a statement. statement.
In Beijing, the Chancellor will visit the flagship store of bicycle manufacturer Brompton, which the Treasury says is “a major success story for UK exports to China”.
As well as expanding Shanghai’s existing financial services trade, the government said the negotiations would aim to “remove barriers” that British businesses face when trying to export or expand into China.
Reeves will be joined by Bank of England Governor Andrew Bailey, Financial Conduct Authority chief executive Nikhil Rathi and other senior representatives from some of Britain’s biggest financial services companies.
But the visit also comes after MPs challenged China-founded fashion retailer Shein over its supply chains, amid allegations of forced labor and human rights abuses. Shein has denied the allegations.
On Tuesday, a senior lawyer representing Shein repeatedly refused to say whether the company sells products containing cotton from the Xinjiang region, a region where China has been accused of subjecting Uighur Muslims to forced labor.
