LONDON ― The chair of the United Kingdom’s biggest business lobby group has urged the government to foster closer economic ties with China, even if it risks the ire of United States President-elect Donald Trump.
As Chancellor Rachel Reeves heads to Beijing for talks on boosting investment between the two countries, Rupert Soames, chair of the Confederation of British Industry, told POLITICO’s Power Play podcast: “We need to go beyond the security concerns.”
“The fact is that we have to have a relationship with China,” he said. “It’s one of the fastest growing economies in the world. They are a huge part of our supply chain.
The chancellor’s trip to China on Friday comes as the newly installed Labour government seeks to renew Britain’s relationship with Beijing, ahead of a “China audit” due in the spring. Her visit, which will focus on financial services, follows Prime Minister Keir Starmer’s meeting with President Xi Jinping on the sidelines of the G20 last November, the first time in six years that a British leader has met with the Chinese president.
Yet Trump’s imminent reentry into the White House could leave Britain in the middle of two behemoths if the incoming U.S. president makes good on his pledge to impose punitive trade tariffs on China. Soames, however, believes the U.K. should take advantage of this position.
The China-U.S. relationship is like “two 500 pound gorillas staring at each other,” Soames said, but the U.K. can “be a nimble, agile animal of a smaller size and maybe be part way between the two.”
The U.K. can profit from distinguishing itself from the EU and Washington as it establishes its ties with China, Soames, a City veteran who is also the grandson of Winston Churchill, added.
“We can’t keep on saying to China: ‘No, we don’t want to have a relationship.’ The good news is they appear to want to have a relationship with us. And we can row our own boat: We do not have to be tied into the EU’s relationship with China.”
The CBI head was also optimistic about the U.K. skirting the impact of any deepening trade conflicts: “For the first time since Brexit, the U.K. is finding itself in a position where it’s going to be doing more trade other than just clearing up the mess of Brexit.
“How are tariffs going to affect us as opposed to the EU? The answer is it probably affects the U.K. less because we are a more services-based economy. If you go and look at our companies in the London stock market, typically 80 percent of their revenues are right outside the U.K., a lot of them in the U.S.”
But Soames was less supportive of Reeves’ tax-raising measures in her first budget in October, which he said many industry bosses are blaming for hindering the economy.
“If you want business to go and hire more people, if you want to invest faster, then actually going and saying the entire fundraising is going to come from business … not surprisingly, it has had a chilling effect. Business is where the burden has fallen, because they [the government] took the decision to say there would be no rise in personal taxes. And business is not happy about that.”
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