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Rachel Reeves wants to breathe new life into the scheme linking the London and Shanghai stock exchanges, as she spoke of financial services as the “highlight” of Britain's economic relationship with China on Saturday.
The chancellor will discuss greater cooperation between Britain and China in bonds, pensions and capital markets and asset management as he tries to restart the conversation after more than five years of hiatus from high-level UK visits to the country.
The UK government sees an opportunity to boost financial services ties with China as Donald Trump prepares to become US president after vowing to take a tougher line with Beijing, according to financiers on the move.
However, Reeves' plans for a three-day visit to Beijing and Shanghai have been overshadowed by the bond market sell-off that has pushed Britain this week. borrowing costs to the highest level since the 2008 financial crisis. Opposition Conservative politicians called on him to cancel the trip.
“We are seeing the economic chaos that Rachel Reeves is doing, and the implications of her ongoing Budget. “But what's surprising is that he made the choice to get on the jet instead of trying to catch it,” said Mel Stride.
“The chancellor needs to turn around, and go back to the UK as soon as possible,” he added.
Speaking before the trip, Reeves he said he would find “common ground on trade and investment while being frank about our differences and maintaining national security as the first duty of this government”.
He added: “We can build for a long time economics a relationship with China that serves the country's interests. “
The City of London is suffering from a lack of public offerings amid a steady stream of UK-listed companies delisting or going private.
Bank executives hope that Chinese companies that previously wanted to list in the US may choose to sell shares in London if relations between Washington and Beijing worsen.
Shein, the fastest growing online retailer, filed confidential documents with UK and Chinese regulators last year to make an initial public offering in London with a planned market value of £50bn.
This has raised hopes among investors that other Chinese companies may follow suit, although there is controversy over allegations that Shein uses forced labor as part of its supply of cotton 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 colleagues 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 support exports of financial services to China, since they are now a fraction of those going to the US and the EU, officials said.
The Shanghai-London stock link was launched with much 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 individual countries.
But this has been done by only six Chinese companies, raising £6.6bn, UK companies, while trade has been muted. The chancellor is hoping to make the dual row between the UK and China easier.
The visit marks the revival of the China-UK Economic Dialogue, an annual set of bilateral talks that have been suspended since 2019 due to the Covid-19 pandemic and diplomatic relations.
During his visit, Reeves will visit the Beijing store of UK bicycle manufacturer Brompton and meet executives from other British companies with a presence 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 the City of London's top banks with major Chinese deals to accompany him this week.
The Governor of the Bank of England Andrew Bailey is also on the trip, along with Baroness Shriti Vadera, the chairman of the insurer Prudential, Sir Douglas Flint, the chairman of the fund manager Abrdn, and Richard Oldfield, the head of the asset manager Schroders.