Reeves to take UK banks to China as they seek closer business ties

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Rachel Reeves will next month lead a delegation of leading bankers to Beijing to explore closer ties in the various economies, quietly putting to rest security fears over UK-China relations.

The chancellor has been leading opposition to China’s inclusion in the “elevated phase” of a new scheme that would force companies representing foreign corporations to register their work in a central register, according to government officials.

They fear that including Chinese nationals in the scheme – which is intended to allow the UK to monitor potential foreign affairs – could strain business ties with the People’s Republic.

The show about Chinese espionage at the heart of the British establishment this week has been complicated Reeves‘ visit in January.

The chancellor will be accompanied by City minister Tulip Siddiq and finance leaders on the visit, which is expected to relaunch UK-China economic talks, which last took place in 2019.

The discussions will cover issues such as cooperation in the social markets, increasing cooperation between financial markets and commercial markets, cooperation on rules, and clean energy, according to people who have been briefed on the process.

But Conservative leaders said this week’s spying revelations showed Britain needed to take a tougher stance against Beijing.

Tom Tugendhat, a former Conservative defense minister, said it was important that this was done China it was placed on the “extended section” of the “registration process of foreign influences”, which he created.

The plan is a bipartisan program that will force companies doing certain things to foreign countries or corporations to disclose their transactions in a central registry. It aims to encourage the UK government to understand the impact of the country and the extent of foreign influence.

In compliance with the US Foreign Agents Registration Act, the plan was first proposed by Rishi Sunak and is expected to go into effect this fall.

But it has been slow since Labor came to office, as Sir Keir Starmer has grappled with the same debate that faced his Tory predecessors: whether to involve China on a more serious scale.

Tugendhat said this week that advice from MI5 was “very clear” that the attack “wouldn’t be worth having” if Beijing wasn’t in an advanced phase, which requires more scrutiny of foreign nationals.

Reeves and Jonathan Reynolds, the commerce secretary, are among those opposed to the Chinese merger, according to administration officials. “It would have a clear impact on the financial services sector,” said one.

Reeves said on Monday that Britain would take a “positive” approach to relations with China and that national security was the top priority – but added that trade considerations were also important.

“Like other countries around the world, we have to do business and look for money if it is in the interest of our country to do so, and that is the way of this government,” he said.

Lobbyists in London are refusing to speak publicly for fear of exacerbating the crisis, but say the plan will disrupt business with China and create a more difficult regime than seen in rival countries.

Another said: “It can take a lot of daily work. There hasn’t been any discussion. North Korea or Iran (both of which are at the top) are very different from China, because of the amount of trade. “

Reeves’ talks in Beijing will focus on the economy. According to a document first reported by Bloomberg News, they will also include talks on resuming the London-Shanghai Stock Connect – allowing for two listings – which was first proposed in 2015 and suspended in 2020.

The talks will also consider improving the regulatory environment for financial services firms and deepening cooperation between UK and Chinese financial services firms. The Treasury declined to comment.