Beijing, China – Chancellor of the Exchequer Rachel Reeves reaffirmed her commitment to her October Budget during her visit to China, labelling the fiscal rules underpinning the financial plan as “non-negotiable.” Addressing reporters at the flagship store of British bicycle manufacturer Brompton in Beijing, Ms Reeves emphasised that economic stability remains essential to fostering growth and prosperity in the UK.
“Growth is the number one mission of this Government,” Ms Reeves said. “The fiscal rules laid out in the Budget are non-negotiable. Economic stability is the bedrock for economic growth and prosperity.”
Strengthening UK-China relations
The Chancellor’s trip to Beijing is part of the Government’s broader initiative to foster “common ground on trade and investment” with China. Her visit coincides with a UK-China Economic and Financial Dialogue meeting alongside Chinese Vice Premier He Lifeng. Discussions are expected to cover trade, investment, and pressing issues such as China’s support for Russia’s war in Ukraine.
“Choosing not to engage with China is no choice at all,” Ms Reeves stated. “The UK must engage pragmatically with countries worldwide to support British businesses and promote exports overseas.”
While Ms Reeves acknowledged the necessity of working with the world’s second-largest economy, she also underscored the importance of raising concerns over areas of disagreement. “We must speak candidly with China where we disagree, including on democratic values, freedoms, Hong Kong, and its support for Russia’s illegal war in Ukraine,” she added.
Domestic criticism amid financial market volatility
The Chancellor’s visit has drawn criticism at home, with the Conservative opposition accusing her of prioritising diplomacy over addressing the UK’s economic challenges. The trip coincides with rising government borrowing costs and heightened volatility in financial markets.
On Thursday, yields on 10-year government bonds peaked at 4.89%, the highest level since 2008, before settling slightly lower on Friday. The yield on 30-year gilts briefly hit 5.43%, the highest since 1998. Meanwhile, the pound has weakened against the US dollar, reflecting concerns about the UK’s economic stability.
Ms Reeves has pledged to uphold fiscal discipline by ruling out increased borrowing or tax hikes. Reports indicate she is prepared to impose further spending cuts, including potential reductions in the welfare budget, to balance the books.
Balancing trade and ethical concerns
Writing in The Times, Ms Reeves highlighted the importance of trade with China, noting that it is the UK’s fourth-largest trading partner, supporting nearly half a million British jobs. However, she also stressed the need to address “real economic and trade concerns,” including limited market access and practices that distort fair competition.
More Read
The UK Government has positioned its renewed engagement with Beijing as part of a pragmatic reset in relations. It has promised to challenge the Chinese administration on contentious issues such as human rights abuses against Uighur Muslims and constraints on freedoms in Hong Kong.
Looking ahead
Ms Reeves’ visit to Beijing underscores her dual focus on fostering international trade ties while maintaining a firm commitment to fiscal discipline at home. Accompanied by Bank of England Governor Andrew Bailey, Financial Conduct Authority Chief Executive Nikhil Rathi, and representatives from major UK financial firms, the Chancellor aims to position Britain as a competitive player on the global economic stage.
“The UK must pursue relationships that act in our national interest,” Ms Reeves reiterated. “Engagement with China needs to reflect both opportunities for growth and our broader values and commitments.”
As the global economy grapples with financial uncertainty, Ms Reeves’ steadfast support for her fiscal policies highlights her determination to return the UK to a path of sustainable economic growth. However, questions remain about the long-term impact of rising borrowing costs and the viability of her economic strategy in a challenging international landscape.
