Rachel Reeves’ trip to China – the first by a British chancellor since 2019 – was always going to spark controversy.
In recent years Conservative governments have kept Beijing remotely – amid concerns about espionage, the situation in Hong Kongand the treatment of Uighurs.
David CameronThe so-called “golden age” of commitment to continued economic investment, famously capped by a visit to an Oxfordshire pub for a pint with President Xi Jinping, was widely seen as a naive error.
There are many – including the new American president Donald Trump – who think we should keep our distance.
But in another era of economic crisis, continued growth is the government’s number one priority.
Rachel Reeves visits a bicycle store in Beijing. Photo: AP
This week difficult news in the market – with the cost of government borrowing rising and the value of sterling falling – has raised the stakes considerably.
The Conservatives and Liberal Democrats argued the visit should be canceled.
Prominent China hawk and former Conservative leader Iain Duncan Smith MP has summarized the two arguments against the proposal.
“This trip is pointless,” he wrote on the Labor government dreams.
“Instead, she should stay home and try to sort out the terrible mess her budget has created.” »
President Xi Jinping and David Cameron in 2015. Photo: PA
Yet canceling the trip would have been a diplomatic disaster and, far from contributing to economic stability, would surely have propagated a sense of crisis (with inevitable comparisons to Denis Healey’s abandoned visit to Hong Kong in 1976, months before (he is forced to apply due to an emergency). loan from the IMF to save the pound sterling from collapse).
Instead, the government maintains that the current market situation is the result of “global trends” and Reeves insists that it will stick to the decisions taken within the framework of the budget.
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“Growth is the number one mission of this government. The budgetary rules set out in the budget are not negotiable. Economic stability is the foundation of economic growth and prosperity.
Improving relations between the UK and China should “boost our economic growth for the benefit of workers in both our countries”, she said during her meeting with Deputy Prime Minister He Lifeng.
In a speech to the media that followed, Reeves was delighted to announce a large, concrete figure to justify the value of the trip, saying the deals reached would bring £600 million to the UK economy over five years.
Pragmatism is the new order of the day. Labor argues that reestablishing “pragmatic engagement” with China is in the national interest, and it’s a word Reeves used four times in five minutes during his speech.
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The government insists these new, closer relationships will make it easier to raise sensitive issues and we have heard the Chancellor express concerns about Hong Kong and China’s role in Russia’s war in Ukraine – but not imprisoned Uyghurs or Brits. citizen and pro-democracy activist Jimmy Lai.
The challenge going forward will be to show that getting closer to China is worth it.
There are many issues weighing on the Chancellor – with questions being openly asked about her economic strategy given the growing likelihood that, to meet her fiscal rules to balance tax and spending, she will be forced to make deep cuts to government departments this spring.
We are promised a big speech from the Chancellor on the government’s growth plans in the coming weeks.
In many ways, the trip to China may have been a welcome break from the difficult decisions that await his return.