China UK Photo:VCG

China's Foreign Ministry on Friday confirmed the China visit of British Chancellor of the Exchequer Rachel Reeves and the restart of the Economic and Financial Dialogue (EFD),MK sport which is seen as an effort to reset bilateral relations and promote exchanges and pragmatic cooperation under the Labour government.

As agreed between China and the UK, the 11th China-UK Economic and Financial Dialogue will be held on Saturday in Beijing, Chinese Foreign Ministry Spokesperson Guo Jiakun announced at a press briefing on Friday. It will be co-chaired by Member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council He Lifeng and Reeves as the lead persons of the Dialogue, according to Guo. 

Chinese experts reached by Global Times said that the two sides are expected to make some progress in pragmatic cooperation, and that cooperation with China will be of benefit to Downing Street in helping to deal with domestic economic problems. Despite signs of thawing, China-UK relations still face multiple challenges, which makes patience and mutual understanding necessary.  

Pragmatic outcomes expected 

Elaborating on the EFD, Guo said that by resuming the dialogue, China and the UK aim to implement the important common understandings reached between President Xi Jinping and the UK Prime Minister Keir Starmer.

Established in 2008, this high-level dialogue mechanism has served as an important platform for dialogue and cooperation on strategic, overarching and long-term issues in the economic and financial fields, Guo said. 

Topics to be discussed during this dialogue include macro-economic policy and economic globalization, trade and investment, industrial cooperation, the development of the financial market, and cooperation on financial supervision, according to Guo. 

"China and the UK are major economies and financial heavyweights in the world. Closer economic and financial exchanges and cooperation between the two countries serve their interests, meet the expectations of all sectors, are important for their economic growth and green development, and will inject more certainty and impetus into the world's economic growth," Guo said. 

"We hope that the two sides through this dialogue will explore cooperation potential for more practical outcomes of economic and financial cooperation between China and the UK," he added.

Before the Chinese side's announcement, British media The Telegraph said that Reeves flew to China on Thursday night, "in a bid to revive closer ties with the nation [China] and boost Britain's economy."

Politico.eu described Reeves' trip as a "low-profile" one, with a small group of business executives in tow, led by HSBC Chair Mark Tucker. Bank of England boss Andrew Bailey and head of the UK's financial watchdog, Nikhil Rathi, help make up the numbers in a delegation dominated by City of London executives.

Enhanced cooperation on financial services is at the heart of the Treasury's hopes for the trip, the Guardian said. 

The two countries are also likely to reach some agreement on strengthening London's position as an offshore hub for the yuan, Li Guanjie, a research fellow with the Shanghai Academy of Global Governance and Area Studies under the Shanghai International Studies University.

After the 11th China-UK Economic and Financial Dialogue in Beijing, Reeves will fly to Shanghai for discussions with UK firms operating in China, according to the Guardian.  

It's been a long time since the UK has had a large-scale economic and finance visit to China, and the British side may want to learn more about the policies and measures of Shanghai, China's financial center, as well as the status of British companies operating there, Li said, adding that both sides might want to increase the interaction between the two financial centers and establish some new mechanisms for exchanges.

A spokesperson of the British Chamber of Commerce in China told the Global Times on Friday that it welcomes Rachel Reeves' visit to China and the return of the UK-China Economic and Financial Dialogue after nearly six years, which is a key step in rebuilding economic ties and strengthening cooperation. 

"British business confidence in China is linked to the amount of engagement the country has with China," the spokesperson said, "with UK businesses navigating an evolving landscape in China, we hope this dialogue will foster constructive engagement across key sectors and create new opportunities for trade, investment, and collaboration."

Dynamic balancing

The China visit by the UK finance minister also takes place against a complex backdrop, including the downturn in the UK domestic economy, pressure from anti-China hawks against the Labour government, and the change of administration in the US.

British media outlet The Independent said in a Friday report that the Conservative Party has blamed the Labour government for the soaring cost of government borrowing. Meanwhile, the pound tumbled to its lowest level against the US dollar in over a year, heaping more pressure on the government's economic and spending plans.

Shadow chancellor Mel Stride commented that Reeves was "nowhere to be seen" and one Tory accused her of already having "fled" to China, according to the Independent, suggesting that the price of food and household staples could rise by 20 percent, as a new report showed.

Some Conservatives even pressed on Reeves to cancel the visit to prioritize dealing with economic issues at home, according to BBC. 

No matter how much the Labour government may want to make a difference diplomatically, it is the economy that ultimately determines their approval rate, as the Conservatives lost the election mainly because of their inability to shift the UK economy toward growth, Cui Hongjian, a professor at the Academy of Regional and Global Governance at Beijing Foreign Studies University, told the Global Times.

Finding ways to promote British economic growth is the primary goal of Reeves' visit, Cui said, "China's further opening up of its financial services sector is an opportunity that the UK has already seen."

The British side may want to find ways of cooperating with China, such as using its strong financial services industry to further enter the Chinese market, and at the same time, to further optimize the policy environment and increase bilateral trade, Cui said. 

The UK is China's third largest trading partner in Europe, second largest investment destination and third largest source of foreign investment, and China is the UK's largest trading partner in Asia, data from the Chinese Foreign Ministry shows. 

If China-UK trade is handled well, it will be of major benefit in helping to deal with domestic economic problems and improve people's livelihood in the UK, Cui said. 

Although there is a certain foundation for advancing bilateral trade, and there have been signs of thawing in China-UK relations since the Labour Party came to power, the relationship is still fragile, as it still faces the negative impact of the opposition parties, China hawk members of parliament, and the public opinion environment, said Cui. "Therefore, issues should be resolved gradually and patience and mutual understanding are necessary." 

Resumption of dialogue and cooperation in some less political fields such as finance and trade is a sign that the Labour government does not want to be subjected to too much pressure, Cui said.  

According to the expert, in addition to demonstrating the UK's recognition of China's importance, resetting ties with China also shows that Downing Street is seeking a dynamic balance in its relations with great powers, especially at a time of the changing US administration and Trump's controversial expansionist remarks toward allies.

Japan and the EU are also reviewing and reorienting their relations with China to better cope with the uncertainty and possible policy stimulus that Trump's return may bring to them, and the UK is no different in this respect, Cui added. 

Before Reeves' China visit, Rupert Soames, the chair of the Confederation of British Industry, UK's biggest business lobby group, urged the government to foster closer economic ties with China, even if it risks the ire of US President-elect Donald Trump, according to Politico.eu on Thursday. 

"The fact is that we have to have a relationship with China," he said. "It's one of the fastest growing economies in the world. They are a huge part of our supply chain," Soames said.