The UK cannot afford to give the “cold shoulder” to China, the City minister said on Monday, in comments that will distance the British government from the Biden administration’s protectionist crackdown.
Addressing financial services bosses at the City Week conference in London’s Guildhall, Bim Afolami said it was “crucial” to engage with strategic competitors such as Beijing, and that the UK risked losing control of its economic future if it failed to find common ground.
“Like with any bilateral relationship, we don’t agree on everything, [but] we are very clear that you simply cannot give the cold shoulder to an economy that is home to a fifth of the world’s globally systemic important banks, four of the world’s largest banks, and almost a third of the world’s leading global financial centres. It just doesn’t make sense,” he said.
“Therefore, it is in our interest to engage where we can. [It is] profoundly in our interest to do so.”
Afolami said keeping the door open to Beijing would mean the two countries could tackle shared challenges, including the climate crisis, biodiversity loss and ageing populations, together. “Where China is concerned, we are taking the long view.”
He stressed that the UK “should only engage, of course, where it’s consistent with our interests. But be in no doubt that is absolutely not the same thing as disengagement.”
Afolami added: “If we hesitate too much – as Lord Cameron, the foreign secretary himself, noted two weeks ago – our competitors will write our future for us.”
The City minister’s comments will help distance the UK from policies introduced by the US president, Joe Biden, who last week announced more stringent tariffs on $18bn-worth of Chinese goods, including electric vehicles, lithium batteries, critical minerals and semiconductors.
The move is meant to protect US manufacturers from cheap imports from China but threatens to inflame trade tensions between the world’s two biggest economies.
Meanwhile, the UK government is continuing to court Beijing and Chinese firms, including the fast-fashion company Shein, which is stepping up preparations for a London listing at a time of dwindling interest in the UK stock market.
Shein, which according to one of the sources was valued at $66bn (£52bn) in a fundraising last year, started engaging with the London-based financial and legal advisers to explore a listing early this year, according to reports, after its attempt to float in New York faced regulatory hurdles and pushback from US lawmakers. It could end up being London’s biggest stock market float for years.
However, there are still lingering concerns about Chinese interventions in the UK. Two weeks ago, it emerged that 270,000 payroll records belonging to nearly all members of Britain’s armed forces had been exposed to Chinese hackers.
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The Labour party has said it would launch a “full audit” of the UK’s relations with China if it wins the next election.
The UK’s competitive position on the international stage was also addressed on Monday by the London Stock Exchange chief executive, Julia Hoggett, who continued the group’s campaign for higher executive pay.
Hoggett praised company board members for sticking their necks out and offering bigger payouts to bosses this year, even if it proved unpopular with some shareholders. It follows a fresh wave of shareholder dissent, including at Smith & Nephew, and the pharmaceutical company AstraZeneca, over multimillion-pound pay increases.
“We’ve … seen a far greater willingness of remuneration committees to sit on what I call ‘the naughty step’ by accepting that some resolutions will gather more than 20% of votes cast against them,” she said during a keynote address at the City Week event. Companies that receive at least 20% opposition from shareholders are required to justify their pay decision and are flagged by asset management groups.
However, Hoggett suggested that more companies should be jumping onboard. “It remains my belief, however, that this remains more in our hands than we think. As parents, we all know that the naughty step is not a naughty step if everybody’s sitting on it.”