UK treasurer says London 'natural home' for Chinese finance

British Treasurer Rachel Reeves called London a "natural home" for Chinese finance during a visit to Beijing on Saturday, even as bond market turmoil cast shadows over the UK economy.

Reeves, whose title is chancellor of the exchequer, is the most senior UK official to visit China since then-Prime Minister Theresa May met President Xi Jinping seven years ago.

The visit comes as British government bond yields hit a 17-year high, complicating Labour Party efforts to boost growth. The surge raises risks of spending cuts or tax hikes as the government struggles to manage its debt.

At reopening suspended UK-China finance talks, Reeves said London was a "natural home for China's financial services firms and your clients raising capital." She also called for stronger "regulatory cooperation" between the two nations.

Reeves highlighted £600 million ($732 million) in potential benefits for the UK economy over five years but offered few details. She said agreements included financial services, trade, and climate change.

Her Chinese counterpart, Vice Premier He Lifeng, praised mutual respect, saying it was key to "healthy" bilateral relations.

Reeves faced criticism for not staying home to address financial challenges, but Prime Minister Keir Starmer defended her "long-standing" trip.

At a press briefing, Reeves acknowledged recent market upheavals but stood firm on her fiscal rules. "Growth is the number one mission of this government," she said.

Bank of England Governor Andrew Bailey and Financial Conduct Authority CEO Nikhil Rathi joined the trip, reflecting the UK’s intent to reset diplomatic and trade ties with China.

In November, Starmer met Xi at the G20 summit, marking the first UK and Chinese leaders meeting since 2018. The meeting sought a balance between cooperation and raising concerns on issues like human rights and Ukraine.

Tensions remain over allegations of Chinese espionage involving Prince Andrew and Beijing’s national security law on Hong Kong, which the UK says undermines freedoms in the former colony.

Reeves stressed "frank exchange" on disagreements, including national security and Russia’s war in Ukraine. He repeated China’s stance as “neither a creator nor direct party” to the conflict but described Hong Kong as a bridge for future cooperation.

Relations between the nations have been strained since 2020 when Beijing imposed sweeping restrictions in Hong Kong.