Unlock Editor’s Roundup for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
Rachel Reeves wants to breathe new life into a scheme linking the London and Shanghai stock exchanges as she touted financial services as the “centerpiece” of Britain’s economic relationship with China on Saturday.
The chancellor will argue for greater cooperation between Britain and China on bonds, pensions and capital markets, as well as asset management, as she seeks to restart dialogue after a hiatus of more than five years in high-level visits. in the United Kingdom in the country.
The UK government senses an opening to strengthen financial services ties with China as Donald Trump prepares to become US president after he promised to adopt a tougher stance with Beijing, according to financiers briefed on the trip.
However, Reeves’ preparations for the three-day visit to Beijing and Shanghai have been overshadowed by a sell-off in bond markets that this week pushed British borrowing costs to their highest level since the 2008 financial crisis. opposition conservatives asked her to cancel the trip.
“We are witnessing an economic mess of Rachel Reeves’ own making, with the effects of her disastrous budget continuing to bite. However, surprisingly she made the choice to get on a plane rather than stay and try to catch up,” shadow chancellor Mel Stride said.
“The chancellor must return immediately and return to the UK as a matter of urgency,” he added.
Speaking ahead of the trip, Reeves said he would find “common ground on trade and investment while being honest about our differences and maintaining national security as the first duty of this government”.
She added: “We can build a long-term economic relationship with China that works in the national interest.”
The City of London is suffering from a lack of initial public offerings amid a steady flow of UK-listed companies moving their listings elsewhere or going private.
Bank executives hope that Chinese companies that would have previously sought to list in the US may instead choose to sell shares in London if relations between Washington and Beijing deteriorate.
Shein, the Chinese online fast fashion retailer, filed confidential documents with UK and Chinese regulators last year for a London IPO with a planned market valuation of £50bn.
That has raised hopes among financiers that other Chinese companies could follow, despite controversy over claims that Shein uses forced labor as part of its cotton supply from China’s northwestern Xinjiang region.
Financial Conduct Authority chief executive Nikhil Rathi is accompanying Reeves on the three-day trip and may discuss Shein’s listing plans with his counterparts in Beijing. David Schwimmer, chief executive of the London Stock Exchange, is also part of the delegation.
Reeves saw the meetings as an opportunity to boost financial services exports to China, which are currently a fraction of those in the US and the EU, officials said.
The Shanghai-London stock link launched to great fanfare in 2019 but has struggled to gain traction since then. It was intended to encourage Chinese and British companies to list their shares in each other’s countries.
But this was done by just six Chinese companies, raising $6.6 billion, with the trading muted. No UK company has done this. The chancellor hopes to ease such double listings between the UK and China.
The visit marks a revival of the China-UK Economic and Financial Dialogue, an annual set of bilateral talks that has been suspended since 2019 due to the Covid-19 pandemic and the deterioration of diplomatic relations.
During her visit, Reeves will visit the Beijing store of British bicycle manufacturer Brompton and meet with executives from other British companies present in China, including Jaguar Land Rover, Unilever and Diageo.
HSBC chairman Mark Tucker, who heads the business delegation, and Standard Chartered chairman José Viñals are among senior City of London bankers with significant Chinese operations accompanying him this week.
Bank of England governor Andrew Bailey is also on the trip, along with Baroness Shriti Vadera, chairman of insurer Prudential, Sir Douglas Flint, chairman of fund manager Abrdn, and Richard Oldfield, head of asset manager Schroders.
