A single tweet could derail British Chancellor Rachel Reeves’ trip to China. The U.K. finance minister is taking a risk with her Beijing visit this weekend, as she seeks investment and funding for the British economy while also risking angering incoming U.S. President Donald Trump.
In theory, the trip should have been an easy win for Labour. After years of tension with the previous Conservative government over human rights and security issues, Reeves can adopt a more business-focused approach with Beijing and try to access China’s large market for economic benefits.
“Everything the Tories did in foreign policy was focused on managing their backbenchers,” said a U.K. government official who spoke anonymously. “We reached a point where we were the G7 country with the worst relationship with China.”
Reeves’s mission is becoming increasingly urgent as the U.K. economy struggles with borrowing costs reaching 1998 levels and the pound weakening. This threatens the government’s promise to boost growth and improve living standards, leading to criticism back home, with opposition parties urging Reeves to cancel the trip.
But it’s Trump’s expected return to the White House and his strong anti-China stance that poses the biggest threat as Britain wants to avoid upsetting its top trading partner. With Trump’s close associate Elon Musk seemingly influencing British politics via posts on his platform X, Reeves risks sparking another backlash.
“China is an important and growing partner, but the U.S. is far more important, and now we have someone extremely hostile to China coming into the White House,” said a bank lobbyist. “If Trump notices or someone brings it to his attention, there will likely be more attacks on the U.K. government for being too soft on China.”
The Trip
Reeves departed Thursday evening with a small group of business leaders, led by HSBC Chair Mark Tucker, for a low-profile visit with no press. Bank of England governor Andrew Bailey and the U.K.’s financial watchdog, Nikhil Rathi, are also part of the small delegation, which is dominated by executives from London’s financial sector.
They will meet with key officials in Beijing on Saturday, Shanghai on Sunday, and return to London on Monday. Though the trip will be brief, it’s still highly important. The two sides will hold the first U.K.-China Economic and Financial Dialogue since 2019, along with a well-organized financial services summit aimed at boosting business. Relations soured under the previous Conservative government due to China’s actions in Hong Kong, the pandemic, and broader human rights concerns. Hardline Tories, like MPs Tom Tugendhat and Iain Duncan Smith, focused on national security issues over potential economic gains.
Business Focus?
The City of London hopes Reeves’ trip will open the door to a more business-friendly approach, similar to the 2010s coalition government, when then Chancellor George Osborne brought Chinese banks to London, strengthening the City’s role as an offshore hub for renminbi. “It’s like George Osborne—it’s about getting billions in cash, not necessarily countering China’s global influence,” said one business leader. “Rachel is the key business figure in government, so sending her to China makes sense. It shows they believe this can lead to economic growth.”
China, as the world’s second-largest economy, offers significant potential for the U.K., which is facing financial strain at home. If the U.K. manages the situation well, it could benefit from being positioned between Beijing and Washington. “We may live in a world with two massive powers facing each other,” said Rupert Soames, chair of the U.K.’s largest business lobby. “But we can be a smaller, agile player.”
This could also present opportunities for the city’s banks, insurers, fund managers, lawyers, and advisers. “More Chinese companies are internationalizing now,” said Nicola Watkinson of TheCityUK trade lobby. “The U.K. is well positioned to help these businesses. We have a strong global reputation and are seen as neutral.”
Economically, the situation has changed. With Chinese banks already present in the City, the potential rewards lie in boosting investments in areas like green finance and pension funds. “If we share standards for green finance, it makes investment and funding easier,” Watkinson said.
Is It Worth the Risk?
However, being caught between two powerful nations can have its downsides. Even in green finance, taking steps toward Beijing’s clean energy ambitions could upset Trump’s pro-oil America. This is a gamble, as Reeves’ hopes for investment may not pay off. China’s market is still notoriously difficult to access without local political connections.
The EU, another key U.K. trading partner, isn’t closely aligned with China either, due to tariff disputes, China’s support for Russia, and concerns about dependence on critical services and materials. “Will the financial services business be enough to justify the risk, given the U.S. and EU are more important?” the bank lobbyist questioned.
For those who closely watch China, Britain’s economic struggles could play into China’s hands in its rivalry with Trump. “Beijing will aim to use Trump’s presidency to drive a wedge between the U.S. and the U.K.,” said Sophia Gaston of the Australian Strategic Policy Institute. “Beijing knows the Starmer government is focused on growth, so they come to these talks from a strong position.”
While Labour hasn’t fully broken with the Tories on national security, tensions remain. A spying controversy involving Prince Andrew and a Chinese businessman shocked the British establishment in December. The government also delayed an audit of U.K.-China relations, which is now due in the spring.
Reeves and her team will travel with burner phones to avoid espionage. Bailey, from the Bank of England, will leave his phone and laptop in London due to cybersecurity advice.
Other Topics of Discussion
While financial services and market access will be key focus areas, trade in agriculture, food, and legal services will also be important. A top priority for the U.K. is expanding market access for British meat products, with the government recently lifting Covid-era restrictions on pork exports to China—Britain’s largest non-EU market for pork.
The U.K. is also keen to improve access for its lawyers in China. Currently, U.K. lawyers cannot qualify to practice Chinese law, and Chinese lawyers cannot practice U.K. law. However, many in the city believe the real barrier to doing business with China is closer to home. London’s financial center is concerned about China being placed on a foreign influence register, which could lead to penalties for executives who fail to manage the risks.
The city fears this would discourage financial services firms from working with Chinese companies, which could negatively impact everyday business. The Treasury still needs to resolve this issue with the Home Office to ensure the economy benefits. Reeves may have made progress on this matter from the comfort of her office at No. 11 Downing Street, avoiding Trump’s ire in the process. She’ll have to hope the trip to China pays off.
