UK-China Economic and Financial Dialogue 2025 Reaps £600M in Deals

From 10 to 12 January 2025, UK Chancellor Rachel Reeves was on an official tour in China. On 11 January, she and Chinese Vice-Premier He Lifeng co-chaired the 11th China-UK Economic and Financial Dialogue in Beijing. On the same day, Chancellor Reeves also had a meeting with Chinese Vice-President Han Zheng. On 12 January, she traveled to Shanghai to meet with Mayor Gong Zheng and also hosted a UK-China Business Roundtable.

The last time the Dialogue was held was in 2019, then came COVID, and the Dialogue was suspended for a number of years. Tasked with a mandate where economic growth is high on the agenda, the new Labour government in the UK has now decided to explore all options in order to give a shot in the arm of the British Economy.

The business community in UK welcomed the move whereas those opposing the rapprochement criticized the UK for ‘cozying up with Communist China.’ Chancellor Reeves defended her mission by stressing that her trip brought back some GBP 600 million in value creation for the benefit of the UK.

“China is the world’s second largest economy, the world’s top goods exporter, second largest source of merchandise imports and the UK’s 4th largest trading partner. Deepening the UK-China partnership on trade, investment, finance, health, education and climate change amongst other priority areas, is vital to delivering growth, investment and high-quality jobs for both China and the UK.”

HSBC Group Chairman Mark Tucker

The agreements cover three main areas: #FinancialServices, Trade & Investment, and #ClimateChange. Actually, both sides agreed to partner on #GreenFinancing to promote the #EnergyTransition.

In that regard, the key agreements in the services sector, with an emphasis on #GreenFinance, are as follows:

• China will grant licenses and quota allocations to UK firms, including HSBC, Schroders, Aspect Capital and Aberdeen, to expand their businesses in China
• China will issue an inaugural sovereign green bond in UK
• Bank of China branch in London plans to issue dual-currency sustainability bonds
• UK-China Green Finance Taskforce will hold a new round of talks
• UK architecture firms will be able to obtain design licenses to operate in China

“More recently, we [Shcroders] have started to manage money invested into Chinese renewable infrastructure, enabling our clients to meet their emissions targets through investing in high-quality clean generation in China. It is the largest renewables market in the world, and we are focused on enabling the transition from fossil to renewable generation.”

Schroders Group CEO Richard Oldfield

A substantial proportion of trade and investment deals involved agricultural products as follows:

• China has reauthorized two UK pork processing plants to permit them to export pig meat and offal into China
• China has reauthorized certain UK porcine semen centers to ensure high-quality pig varieties in China
• UK businesses will be able to export pet food to China for the first time
• UK and China have ironed out the phytosanitary hurdles to enable UK to continue exporting greasy wool to China
• China will reinforce counterfeiting measures for Scotch whisky in China
• China will expedite the approval of respiratory illness vaccines manufactured by UK pharma

On the climate front, the UK and China reaffirmed their commitment to join hands in the fight against #ClimateChange both at the bilateral level and at multilateral fora such as #G20 and UN. To enhance cooperation, the two sides have instituted several mechanisms such as the UK-China Environmental Dialogue, and signed the UK-China Biodiversity Convention in 2024. One of the key common objectives is to scale up #SustainableFinancing in a bid to accelerate the transition to #NetZero.

Currently, China is UK 4th largest trading partner with trade in goods and services reaching nearly GBP 113 billion (USD 138 billion). Shanghai hosts the annual China International Import Expo (CIIE) and the Shanghai Mayor reiterated his warm welcome to British companies to attend the Expo to promote their products and services in the Chinese market.