Cutting business ties with China would be ‘foolish’, Reeves says amid reports of US pressure
Rachel Reeves has dismissed the idea of economically disengaging from China, amid concerns the US may put pressure on the UK to limit its deals with Beijing.
The chancellor, who will discuss a trade deal with the US on a trip to Washington next week, said it would be “very foolish” for Britain to have less involvement with Xi Jinping’s administration.
The Wall Street Journal reported this week that US officials would attempt to use trade deals and tariff discussions to economically isolate China.
Keir Starmer spoke to Donald Trump on Friday about the “ongoing and productive discussions” over a trade deal. It was the first conversation between the British prime minister and the US president since the imposition of 10% tariffs by Washington.
Reeves told the Daily Telegraph: “Well, China is the second biggest economy in the world, and it would be, I think, very foolish to not engage. That’s the approach of this government.”
She also said she supported the fast-fashion company Shein floating on the London Stock Exchange. Shein was founded in China, but is now based in Singapore.
The company has faced allegations of supply chain and labour abuses.
Reeves’s comments came a week after the government was granted emergency powers by parliament to continue operations at the British Steel plant in Scunthorpe, owned by the Chinese company Jingye.
Jingye was accused of not ordering enough supplies to keep the blast furnaces at the site in north Lincolnshire running, leading to a race against time to stop the furnaces cooling.
MPs had criticised potential links between Jingye and the Chinese government, leading to questions over whether Chinese companies would be allowed to invest in critical infrastructure in the UK.
The business secretary, Jonathan Reynolds, said the companies would be looked at in “a different way” to those from other countries in regard to the steel industry, but refused to rule out Chinese investment in other sectors.
The Chinese embassy in London criticised some MPs for “anti-China” rhetoric, and an “arrogance, ignorance and twisted mindset” towards the country.
Reeves told the Telegraph that Chinese investment would be blocked from sensitive areas of critical national infrastructure.
She said she was open to Shein being listed on the London Stock Exchange, as it and the Financial Conduct Authority (FCA) had “very strict standards”.
Shein filed with the FCA in June last year for an initial public offering that could be worth £50bn. However, the FCA has taken longer than usual to approve it, amid concerns over its supply chain.
The campaign group Stop Uyghur Genocide sent a dossier to the FCA in August alleging that Shein used cotton from China’s Xinjiang region.
Reeves said: “We have lost business and we have lost companies in recent years and we’re working closely with the London Stock Exchange to make the UK a more vibrant place to list.”
Reeves will hold talks with US officials, including the US treasury secretary, Scott Bessent, during her visit next week to attend the International Monetary Fund’s spring meetings with other finance ministers.
It is hoped that tariff reductions could be agreed within weeks or months.
Starmer told Trump of his “commitment to free and open trade and the importance of protecting the national interest” in their 35-minute call on Friday.
British officials have presented a draft deal to their US counterparts that includes reductions to tariffs on steel, aluminium and cars.
Sources say it does not cover pharmaceuticals, however. Trump has said he will announce tariffs for the sector “very shortly”, in a move that could cost British drug companies billions of pounds in revenue.
