Rachel Reeves’s trip to China – the first by a British chancellor since 2019 – was always going to be controversial.
In recent years Conservative governments have been keeping Beijing at arm’s length – amid concern about espionage, the situation in Hong Kong, and the treatment of the Uyghurs.
David Cameron‘s so-called “Golden Era” of engagement in the pursuit of economic investment, notoriously capped by a visit to an Oxfordshire pub for a pint with President Xi Jinping – has been widely written off as a naive mistake.
There are many – not least the incoming US President Donald Trump – who believe we should maintain our distance.
But in another era of economic turmoil, the pursuit of growth is the government’s number one priority.
This week’s difficult market news – with the cost of government borrowing surging, and the value of the pound falling – has thoroughly raised the stakes.
Both the Tories and the Lib Dems argued the visit should be cancelled.
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Prominent China hawk and former Conservative leader Iain Duncan Smith MP summed up both arguments against it.
“The trip is pointless,” he wrote on X. “As the disastrous ‘Golden Era’ showed, the murderous, brutal, law-breaking, communist regime in China will not deliver the growth the Labour government craves.
“Instead, she should stay home and try to sort out the awful mess her budget has created.”
Yet cancelling the trip would have been a diplomatic disaster and far from adding to economic stability would surely have spread a sense of crisis (with inevitable comparisons to Denis Healey’s abandoned visit to Hong Kong in 1976, months before he was forced to apply from an emergency loan from the IMF to save the pound from collapse).
Instead, the government argues the current market situation is a result of “global trends”, and Reeves insists she will be sticking to the decisions taken in the budget.
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“Growth is the number one mission of this government. The fiscal rules laid out in the budget are non-negotiable. Economic stability is the bedrock for economic growth and prosperity.”
Improving the UK/China relationship should “boost our economic growth for the benefit of working people in both of our countries” she said during her meeting with vice premier He Lifeng.
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In a speech to media afterwards, Reeves was delighted to announce a big, concrete number to justify the value of the trip, claiming the agreements reached would be worth £600m to the UK economy over five years.
Pragmatism is the new order of the day. Labour argues re-establishing “pragmatic engagement” with China is in the national interest, and it’s a word Reeves used four times in five minutes during her speech.
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The government insists this new closer relationship will make it easier for them to raise tricky issues and we did hear the chancellor flagging concerns about Hong Kong and the role of China in connection with Russia’s war in Ukraine – though not the Uyghurs, or the imprisoned British citizen and pro-democracy activist Jimmy Lai.
The challenge going forward will be to show that cosying up to China is worth it.
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There’s a lot riding on it for the chancellor – with questions being openly asked about her economic strategy given the growing likelihood that to meet her fiscal rules on balancing tax and spending she will be forced to make deep cuts to government departments this spring.
We are promised a big speech from the chancellor on the government’s plans for growth in the coming weeks.
In many ways, the trip to China may have been a welcome break from the difficult decisions which await her return.
