Rachel Reeves heads to China to build bridges, but new golden era of relations is impossible
Rachel Reeves will fly with a delegation of City executives to China this week as Labour seeks closer economic links with Beijing as part of its quest for growth.With the outlook increasingly rocky at home after a run of soft economic data, the chancellor is sorely in need of a positive story to tell.Reeves came under pressure to cancel the long-planned trip amid the sell-off in the bond markets but Darren Jones, the Treasury chief secretary, said she would still go on the “important visit in terms of trends and investment”.She appears determined to normalise the UK’s relationship with the communist superpower, despite mounting security concerns and a backdrop of growing geopolitical tension.In the past few weeks alone, the UK has expelled an alleged Chinese spy and friend of Prince Andrew, Yang Tengbo, while the US Treasury has accused Beijing of hacking into staff computers.
Meanwhile, a lawyer for Shein – the online retailer founded in China and which is lobbying over a potential £50bn London float – was accused of “wilful ignorance” over its supply chain practices by British MPs.At the same time, Beijing is expected to be at the sharp end of Donald Trump’s aggressive trade policy, which could result in tariffs of up to 60% on all Chinese goods.Policymakers are already contending with a rapidly declining yuan and a stock market selloff.Notwithstanding this inauspicious backdrop – and Beijing’s deeply problematic human rights record – Labour is making a concerted effort to build bridges with China.The foreign secretary, David Lammy, visited the country in October, and Keir Starmer had a face-to-face meeting with the Chinese president, Xi Jinping, on the sidelines of November’s G20 summit in Rio de Janeiro.
In its manifesto, Labour promised to reverse what it called “14 years of damaging Conservative inconsistency over China” with a new approach: “We will cooperate where we can, compete where we need to, and challenge where we must,”Last month, Reeves said she sought a “pragmatic” relationship with China, which is the UK’s fifth-largest trading partner, worth £32bn in exports last year,She acknowledged security concerns, but insisted “we should trade and seek investment when it is in our national interest to do so”,City businesses have urged Reeves to help ensure China is not placed on the higher, more stringent, tier of a new “foreign influence registration scheme” – a decision ultimately to be made by the Home Office,Lobbyists for overseas governments will have to declare their role under this new regime, but the “enhanced” tier will force companies carrying out any activity on behalf of another state to make themselves known – something business groups fear could prevent closer ties.
The chancellor will take the Bank of England governor, Andrew Bailey, with her on the visit to Beijing and Shanghai, as well as the FCA chief executive, Nikhil Rathi, and senior banking figures, including HSBC’s chair, Mark Tucker.Reeves will meet China’s vice-premier, He Lifeng, in Beijing before flying to Shanghai for discussions with UK firms operating in China.Enhanced cooperation on financial services is at the heart of the Treasury’s hopes for the trip.Reeves lavished praise on the sector in her Mansion House speech last year, calling it the “crown jewel” of the UK economy.The economist Gerard Lyons, who is on the board of the state-owned Bank of China, says: “From the Chinese perspective, they’re moving up the value curve in terms of the economy and the UK, given its expertise in services and financial services, would be able to provide some assistance there.
“And naturally, from the UK perspective, we want to see more inward investment from China and more trade with China – so it suits both sides,”Reeves has been clear that the UK hopes to fly the flag for “free and open trade” in the face of Trump’s “America first” protectionism,Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe chancellor’s trip is expected to mark the resumption of the UK-China Economic and Financial Dialogue (EFD), a formal arrangement between the two countries,This structure of regular meetings was introduced under Tony Blair’s government, but the last one was held in London in 2019,After that, relations soured as the draconian security law was passed in Hong Kong, prompting Boris Johnson’s government to open a visa scheme for British passport holders in the territory that has since brought more than 150,000 people to the UK.
Over recent years, China and the US have been locked in an increasingly fractious battle for economic supremacy, and hopes have long faded that Beijing’s induction into the global trading system a quarter of a century ago would lead it in a more liberal direction.While Trump’s anti-China rhetoric has been vehement, Joe Biden retained the swingeing tariffs imposed in Trump’s first term.Biden has also used export restrictions to try to restrict China’s access to key technologies, on security grounds.Neil Shearing, the chief economist at consultancy Capital Economics, who is writing a book about the US-China clash and its influence on the rest of the world, says the UK is unlikely to be able to resist taking sides, whatever Reeves’s intentions.“Given the UK is trying to find a place for itself in the world post-Brexit, trying to build some bridges is not necessarily a bad idea,” he says.
But, he adds: “This post-Covid era is about the geopolitical rivalry between the US and China – they are the pre-eminent global superpowers, and increasingly other countries will be forced to pick a side.And in that instance it’s pretty clear which way the UK will break, Trump or no Trump: they’re going to break for the US.We saw this with Huawei.”Huawei, the Chinese telecoms operator, was banned from the UK’s 5G network in 2020 by Johnson.The UK government had initially sought to take a different line from the Trump administration, but eventually caved in to intense US pressure.
Shearing says: “Countries don’t get to decide where they align: the US and China get to decide the contours of this fracturing.”Because of this darker geopolitical backdrop, there will be no resumption of the “golden era” for UK-China relations touted by George Osborne in 2015 – the same year that, improbably, saw President Xi sipping a pint of IPA in David Cameron’s local pub during a state visit.But with GDP at home stagnating, Reeves clearly hopes to underline the distance she is willing to go to seek out willing business partners for the UK.
Judge halts attempt to retrieve £600m bitcoin wallet from Welsh dump
A computer expert’s decade-long battle to recover a £600m bitcoin fortune he says has been lost in a council dump has been halted by a judge.James Howells, 39, launched a legal case to force Newport city council to allow him to search the site to retrieve a lost hard drive containing the bitcoins.The council sought to strike out the claim, and a judge has ruled in its favour. Sitting as a high court judge, Judge Keyser KC said on Thursday that Howells’s claim had “no realistic prospect of succeeding” if he allowed the case to continue to trial.He said: “I consider that the particulars of the claim do not show any reasonable grounds for bringing this case
Musk ‘lying like hell’ over AfD interview, says ex-EU tech leader
A former EU leader on tech has accused Elon Musk of “lying like hell” by claiming the bloc was trying to stop an interview the owner of X had set up with the co-leader of the German far-right party Alternative für Deutschland.Thierry Breton, who quit as a European commissioner in September, having overseen the passage of ambitious legislation designed to regulate big tech, said Musk had been disingenuous in claiming the EU was trying to censor his discussion with Alice Weidel, due to take place on Thursday evening.The US billionaire claimed on Wednesday on his social media platform: “First, the EU tried to stop me from having an online conversation with president @realDonaldTrump. Now they want to prevent people from hearing a conversation with Alice Weidel, who might be the next chancellor of Germany. These guys really hate democracy
Meta has ‘heard the message’ from Trump, says whistleblower Frances Haugen
Mark Zuckerberg has “heard the message” from Donald Trump on restricting online content and his Meta platforms will intervene “less and less” on users during the president-elect’s administration, according to the whistleblower Frances Haugen.Haugen, who revealed the Facebook and Instagram owner’s struggles with user safety in 2021, said the US president-elect thought “the right way to run social media is with no restrictions”.Zuckerberg’s announcement on Tuesday that Meta was dropping third-party factcheckers in the US and making other moderation changes reflected this view, she added.“The announcement from Mark is him basically saying: ‘Hey I heard the message, we will not intervene in the United States,’” said Haugen.Announcing the changes on Tuesday, Zuckerberg said he would “work with President Trump” on pushing back against governments seeking to “censor more”, pointing to Latin America, China and Europe, where the UK and EU have introduced online safety legislation
Meta’s factchecking partners brace for layoffs
Mark Zuckerberg’s decision to end factchecking on Facebook and Instagram in the US already has factchecking journalists bracing for cuts at their organizations, given the size of Meta’s funding.The social media giant has provided more than $100m for outside organizations certified by the International Fact-Checking Network (IFCN) to conduct factchecks on its social networks since 2016, which would result in posts receiving accuracy ratings and having their reach reduced if false. Major outlets like USA Today and Reuters have partnered with the social media company for these factchecks, as have factcheck specific sites like FactCheck.org. In all, 10 outlets are listed by Meta as current partners in the US
AI-generated ‘slop’ is slowly killing the internet, so why is nobody trying to stop it? | Arwa Mahdawi
How do you do, fellow humans? My name is Arwa and I am a genuine member of the species homo sapiens. We’re talking a 100% flesh-and-blood person operating in meatspace over here; I am absolutely not an AI-powered bot. I know, I know. That’s exactly what a bot would say, isn’t it? I guess you’re just going to have to trust me on this.I’m taking great pains to point this out, by the way, because content created by real life human beings is becoming something of a novelty these days
Meta’s changes to policing will lead to clash with EU and UK, say experts
Sweeping changes to the policing of Meta’s social media platforms have set the tech company on a collision course with legislators in the UK and the European Union, experts and political figures have said.Lawmakers in Brussels and London criticised Mark Zuckerberg’s decision to scrap factcheckers in the US for Facebook, Instagram and Threads, with one labelling it “quite frightening”.The changes to Meta’s global policies on hateful content now include allowing users to call transgender people “it”, with the guidelines stating: “We do allow allegations of mental illness or abnormality when based on gender or sexual orientation.”Chi Onwurah, the Labour MP and chair of the science and technology committee for the House of Commons, which is investigating how online disinformation fuelled last summer’s riots, said Zuckerberg’s decision to replace professional factcheckers with users policing the accuracy of posts was “concerning” and “quite frightening”.“To hear that Meta is removing all its factcheckers [in the US] is concerning … people have a right to be protected from the harmful effects of misinformation,” she said
Big retail will cope – but Reeves’ NICs raid is too much, too soon for part-timers | Nils Pratley
What the bond market turmoil means for your mortgage, pension and savings
Collaborative research on AI safety is vital | Letters
Elon Musk says all human data for AI training ‘exhausted’
Money or the starter’s gun? AFL and NRL riches remain a lure for Olympic hopefuls | Nicole Jeffery
The wrong trousers: how sporting dress codes can create an image problem | Emma John