Chinese investment of £600m in UK ‘a start’, says Cabinet minister
China committing to putting £600m in the UK is “a start” and “will lead to future investment”, a Cabinet minister has said.
Science Secretary Peter Kyle said the Chancellor has returned with “solid commitments for investment” as the Government commits to “rebuilding the relationship with China”.
Rachel Reeves has been criticised by the Conservatives and Liberal Democrats for going ahead with the planned visit following turbulence on the UK gilt markets.
Increases in the Government’s borrowing costs have sparked concern that she will be unable to meet her debt and spending targets, with the Tories saying Ms Reeves had “absented” herself when “bond yields are rocketing up”.
Kyle said the UK has to reset its relationship with Beijing “in a way that delivers for our economy” while keeping “our country safe and resilient”, as China’s actions in Hong Kong and Russia’s invasion of Ukraine have also been raised by opposition parties as barriers to more economic engagement.
He told Sky News’s Sunday Morning With Trevor Phillips: “These are difficult issues to manage.
“I think what we have seen, for the Chancellor to go over there, represent Britain on the world stage, come back with solid commitments for investment, but she also managed to raise the human rights issues that I think everybody in this country is concerned about.
“Now the alternative is this, that we sit here and we don’t engage, we don’t come back with even £600m which will lead to future investment into the future (sic).
“So is the answer that it’s not big enough just to do nothing?
“That’s what the Tories are saying, they are saying she shouldn’t go, we shouldn’t have any engagement.
“This is our fourth biggest trading partner.”
The Treasury has said “pragmatic cooperation” has led to the agreements worth £600 million to the UK economy over the next five years and “sets course” to deliver up to £1 billion.
Tory shadow chancellor Mel Stride said Chancellor Rachel Reeves’ visit to China is “tone deaf” and she should be “reassuring” markets in the UK.
He told Sky News’s Sunday Morning With Trevor Phillips: “The markets move fairly quickly, and sentiment and confidence is at the heart of the approach that a good Chancellor should take.
“Now, if you absent yourself and go halfway around the world when bond yields are rocketing up, particularly in this country, with very serious consequences, then you need to be at your station reassuring those markets and I’m afraid it’s rather tone deaf to not have got that in the first place.”
He claimed it would cost an additional £12bn a year to pay for national debt as result of market change that “has real implications for people”.
Stride said: “That £12bn could employ 300,000 nurses.
“It could pay for all our prisons and judges in the UK for a year.
“It could pay the pensioners who have had their winter fuel payment taken away from them, it could pay that for eight and a half years.
“That’s the size of the problem that (Reeves) has created and she should be here to reassure markets.”
The visit, during which Reeves met Chinese vice-president Han Zheng and vice-premier He Lifeng, is the first high-level economic meeting between Britain and China since 2019.
It follows Keir Starmer’s own meeting with Chinese president Xi Jinping at the G20 late last year as Labour has pursued a thaw in relations with China following the more frosty tone set by the previous government.
By Claudia Savage, PA