Reeves to take UK bankers to China as she seeks closer business ties

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Rachel Reeves will lead a delegation of top bankers to Beijing next month to seek closer links with a range of financial services, while brushing aside security concerns about the UK’s relationship with China.

The chancellor is leading opposition to inclusion in the “enhanced tier” of a new scheme to include China, which would force companies acting for foreign entities to list their work on a central register, according to government officials.

He fears that including Chinese nationals in the scheme, which is designed to allow the UK to control potential foreign influence, will disrupt business links with the People’s Republic.

The scandal surrounding alleged Chinese espionage at the heart of the British establishment has grown more complicated this week Reevesvisit in January.

The chancellor will be accompanied by Municipality Minister Tulip Siddique and leading financial figures on the trip, which is expected to relaunch the UK-China Economic and Financial Dialogue, which last took place in 2019.

The talks will address issues such as capital markets cooperation, increased connectivity between financial and bond markets, regulatory cooperation and clean energy, according to people briefed on the agenda.

However, leading Tories said this week’s spying scandal showed Britain needed to take a much tougher line towards Beijing.

Former Conservative security minister Tom Tugendhat said it was crucial China placed on the “enhanced tier” of the “new foreign exposure registration scheme” he developed.

The scheme is a two-tiered plan that will force companies operating in certain capacities for foreign powers or organizations to list those activities on a central register.It aims to strengthen the UK government’s understanding of the nature and extent of domestic external influence.

The scheme, based on the Foreign Agents Registration Act, was first proposed by Rishi Sunak with a view to making it operational this fall.

But that has been delayed since Labor took office as Sir Keir Starmer faced the same debate that dogged his Tory predecessors over whether to include China at a stricter level.

Tugendhat said advice from MI5 this week was “very, very clear” that the scheme was “not worth having” unless Beijing was at an enhanced level, requiring additional vetting of some foreign nationals.

Reeves and Business Secretary Jonathan Reynolds are among those opposed to including China, according to government officials. “It would have a clear impact on the financial services industry,” one said.

Reeves said on Monday that Britain would take a “pragmatic” approach to relations with China and that national security would be the top priority, but added that trade considerations were also vital.

“Like other countries in the world, we must trade and seek investment when it is in our national interest, and that will be the approach of this government,” he said.

Lobbyists for the City of London refuse to speak publicly for fear of inflaming the issue, but argue the scheme will make doing business with China more difficult and create a more onerous regime than in rival countries.

One said: “It will attract a lot of day-to-day business. There hasn’t really been any consultation. North Korea or Iran? [who are both on the higher tier] are very different from China in terms of the level of trade interaction.”

Reeves’ Beijing talks will focus on financial services. According to a document first reported by Bloomberg News, they will include discussion of resuming the London-Shanghai stock link to allow dual listings, which were first proposed in 2015 and discontinued in 2020.

Discussions will also include improving the regulatory environment for financial technology firms and deeper cooperation between UK and Chinese asset management firms.The Treasury declined to comment.