Reeves Addresses Market Concerns as UK Secures Key Trade Deals with China

UK Chancellor of the Exchequer Rachel Reeves has reassured markets about the government’s fiscal plans during her recent visit to China, where she secured deals worth £600 million for the British economy over the next five years.

Speaking in Beijing on Saturday, Reeves addressed concerns over recent market volatility, including a selloff in assets like gilts and the pound.

“There’s undoubtedly been movement in global financial markets over the last few days,” she acknowledged. “The fiscal rules I set out in October’s budget are non-negotiable, and we will take actions to ensure we meet them.”

Reeves’ comments suggest the government may need to consider fresh spending cuts or tax increases to stabilize the fiscal position. Her remarks come amid calls from opposition parties to cancel the China visit, given the financial turbulence.

However, Reeves emphasized the importance of focusing on long-term strategies to stimulate economic growth, including strengthening trade ties with countries like China.

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During her trip, Reeves, alongside Bank of England Governor Andrew Bailey and senior financial leaders, engaged in high-level talks with Chinese Vice Premier He Lifeng. The discussions led to agreements aimed at deepening financial services ties, lifting export barriers, and enhancing trade opportunities between the two nations.

• Financial Market Initiatives: Expanding the UK-China stock connect program, launching an over-the-counter bond business, and exploring a wealth connect initiative. China also announced plans to issue its first overseas sovereign green bond in London this year.
• Trade Expansion: The lifting of export restrictions, particularly in the agri-food sector, is expected to bolster UK trade and create new job opportunities.
• Sector Liberalization: Commitments from China to further open sectors like education and culture to foreign investment.

The deals are projected to bring £600 million to the UK economy over the next five years, with potential long-term benefits of up to £1 billion.

While focusing on economic growth, Reeves didn’t shy away from addressing critical issues during her meetings with Chinese officials. She raised concerns about: National Security: Highlighting interference in the UK’s domestic affairs. Geopolitical Alignments: China’s support for Russia’s defense industry amid the ongoing conflict in Ukraine. Human Rights: Calling attention to Beijing’s record on human rights.

China remains the UK’s fourth-largest trading partner, and strengthening ties is a strategic priority for the Labour government. Reeves’ visit underscores a dual approach: fostering economic collaboration while addressing sensitive geopolitical and ethical matters.