Chancellor Rachel Reeves has pushed back against growing pressure to sever economic ties with China, calling such a move “very foolish” as the UK prepares for high-stakes trade discussions with the United States next week.
Her comments come amid reports that US officials plan to leverage trade deals and tariff negotiations to isolate China economically. As Reeves heads to Washington for talks, she emphasized that engaging with the world’s second-largest economy remains vital for Britain’s prosperity.
“China is the second biggest economy in the world, and it would be, I think, very foolish to not engage,” Reeves told The Telegraph, reaffirming the UK government’s stance on balancing strategic interests with economic pragmatism.
While Reeves confirmed Chinese investment would be restricted in critical national infrastructure, she showed support for China-founded fashion giant Shein listing on the London Stock Exchange — despite ongoing concerns over its supply chain, labour practices, and links to cotton from Xinjiang.
The comments come as the British government recently used emergency powers to ensure operations at British Steel, owned by Chinese firm Jingye, continue amid supply issues. MPs have raised alarms over foreign influence in sensitive sectors, but Business Secretary Jonathan Reynolds said Chinese companies wouldn’t be categorically excluded from investing — only scrutinized more heavily.
The Chinese embassy in London responded to criticism by accusing MPs of “anti-China” rhetoric and maintaining a “twisted mindset” towards the country.
Reeves emphasized that listings on the LSE must still meet the UK’s “very strict standards,” hinting at a delicate balance between attracting global investment and safeguarding national interests.
Meanwhile, Reeves and Prime Minister Keir Starmer are working to finalize a potential UK-US trade agreement. Starmer spoke with President Trump on Friday, emphasizing his commitment to “free and open trade” while protecting British industries. The proposed deal includes tariff reductions on steel, aluminium, and cars — but notably excludes pharmaceuticals, which Trump plans to target with new tariffs, risking billions in revenue for British drug firms.
Reeves will meet with US Treasury Secretary Scott Bessent during the IMF Spring Meetings, where a breakthrough on tariff negotiations could come in the next few weeks.