Starmer’s big trip to China

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It has been more than a decade since George Osborne gave a speech on the floor of the Shanghai Stock Exchange explaining the benefits of a strong partnership between Britain and China.

A number of senior officials, including chief executives, civic leaders and heads of cultural institutions, heard the then Chancellor of the Exchequer’s (British name for the Chancellor of the Exchequer) declaration. “Let’s come together to make Britain China’s best partner in the West.

“Let us work together to build a golden decade for both countries.”

In a speech on September 22, 2015, Osborne estimated that if Britain maintains its market share in trade with China, the country’s exports could rise to more than £30 billion ($46.43 billion at the time) by 2020.

Of course, he didn’t know that in 2020, the world would be hit by a pandemic that originated in China. But he would have been disappointed to learn that exports of British goods to the UK that year would be just £14.5bn, down £9.1bn on 2019.

This 39% decline was not only due to the new coronavirus infection.

By 2020, British politics had been transformed by the vote to leave the European Union, while relations between the two countries had been strained since Beijing introduced new security laws in Hong Kong that were deemed to violate the terms of the former British colony’s return to China in 1997.

It worsened in July 2020, when Boris Johnson’s government banned the purchase of new 5G equipment from Huawei, one of China’s major companies, and simultaneously ordered all Huawei equipment to be completely removed from 5G networks by the end of 2027, at the request of Donald Trump during his first term as US president.

This is the backdrop to Keir Starmer’s disappointing visit to Beijing this week, the first British prime minister since Theresa May eight years ago.

Starmer and Prime Minister Rachel Reeves will be accompanied by executives from some of Britain’s top companies. blood pressure, rolls royce, AstraZenecajaguar land rover London Stock Exchange Groupoctopus energy, diageo And Prudential. Brendan Nelson, the newly appointed chairman of HSBC Holdings, is also reportedly joining the delegation.

The visit is part of efforts to reset relations with the world’s second-largest economy.

“For years there has been a narrative that China is the coming great power, and now it has arrived,” Starmer set the scene at the city’s Women’s Mayor’s Dinner on December 1 last year.

“And Britain needs a China policy that recognizes this reality. But instead we have been blowing hot and cold for years.

“Under David Cameron and George Osborne we had a golden age of relations, but then we turned into an ice age, and some still claim that.

“As a result, the UK became an outlier while its allies developed more sophisticated approaches.”

Reminding the audience that President Trump met with President Xi Jinping in October and will visit China again in April this year, he pointed out that French President Emmanuel Macron has visited China three times since the beginning of 2018, German leaders have also visited China four times, and Chancellor Friedrich Merz is also scheduled to visit China again next month.

Mr Starmer pointed out that there had been no leadership-level talks in the six years prior to his meeting with President Xi in November 2024, and outlined how he had sought to respond to President Trump’s second term and how he had sought to rebuild post-Brexit relations with the EU, as well as envisioning a reset of relations with China.

This reset is something Starmer and his team have been working on since taking office in July 2024. In October of the same year, David Lammy, Starmer’s first Foreign Secretary (Britain’s equivalent of the US Secretary of State), made his first overseas trip after taking office, with Shanghai and Beijing as his destinations. Poppy Gustafsson, then UK investment minister and former CEO of cybersecurity firm Darktrace, hosted a major trade event the following month.

And in January last year, Reeves led a delegation of business leaders to Beijing, accompanied by Bank of England Governor Andrew Bailey. Other Sino-British business events were subsequently held in London, and other ministers, including Energy Secretary Ed Miliband, also visited China.

So this week’s visit, and last week’s controversial decision to approve a new Chinese “super embassy” on the outskirts of the city, should also be seen in that context. This is a strategic imperative as the Starmer government seeks to encourage inward investment.

The issue should also be seen in the context of some of the Labor government’s priorities, such as the race to net zero, in which China, the UK’s largest supplier of solar panels and an increasingly important supplier of wind turbine components, will play a key role.

This is not without risks. The influential Daily Mail newspaper called it a “soothing trip”, but many in Starmer’s party and some foreign and security officials are loath to get too close to Beijing.

To that end, Mr. Starmer is expected to raise allegations of human rights violations against Mr. Xi, including the case of Jimmy Lai, a Hong Kong-based businessman imprisoned for pro-democracy protests. Beijing’s support for Vladimir Putin after the war with Ukraine is also a potential source of disagreement.

But those close to Mr Starmer say he has little choice but to get involved, given the favorable treatment of countries such as France and Germany towards China.

He will also see Beijing increasingly willing to weaponize its economic advantages, such as control over rare earth metal supplies, something President Trump was forced to agree to last year. And how countries such as Australia, South Korea and Lithuania have in recent years been threatened with restrictions on trade and market access once Beijing is crossed.

A potential model for how future relationships could develop is Canada. The country’s Prime Minister Mark Carney visited China earlier this month and returned with what the former Bank of England governor called “an interim but landmark trade deal to remove trade barriers and reduce tariffs.”

But that may not be the case, given President Trump’s furious reaction to that deal, where he threatened to impose 100% tariffs if Canada signs a free trade agreement with China.

British Prime Minister Rachel Reeves said fiscal rules and more headroom would cushion the country from the shock of U.S. tariffs.

British Business and Trade Secretary Peter Kyle told CNBC in Davos that European leaders were united in this “moment of turmoil.”

Enquest CEO Amjad Bseisu discusses the contrasting energy industries in the US and UK and the company’s expansion into Asia.

— Holly Ellyatt

Treasury Secretary Reeves said that despite the rift, the US remained Britain’s “closest ally”. Prime Minister Rachel Reeves told CNBC on Wednesday that the United States remains Britain’s “closest ally” despite a growing rift between the United States and Europe over the future of Greenland.

Nvidia and Alphabet VC back AI startup Synthesia at $4 billion valuation. Nvidia and Alphabet’s venture capital arms have backed British AI startup Synthesia with a $200 million funding round, amid a surge in private investment in promising young technology companies looking to capitalize on the AI ​​boom.

The university’s campus is heated by an AI data center. Your home could be next. Data centers have always generated excess heat, but integration with district heating networks has been slow. That is now changing.

— Holly Ellyatt

This week’s quote

London-listed stocks rose this week. FTSE100 It ended trading on Tuesday at 10,207.80, up 0.58% from 10,138.09 a week ago.

Meanwhile, the pound’s slide against the dollar has accelerated over the past week, with the pound approaching $1.3759 against the dollar on Tuesday afternoon, its highest since August 2021. This compares to last Wednesday’s high of $1.3425.

Elsewhere, the UK government’s benchmark 10-year bond yield (a.k.a. gold leaf — reached 4.528% on Tuesday, up from 4.459% a week ago.

— Hugh Leask

very soon

January 29: UK car production in December

January 30: National housing price data for January

30 January: December Bank of England Mortgage Statistics

— Holly Ellyatt