In a significant shift towards pragmatic UK-China relations, former Conservative Chancellor Philip Hammond has advocated for Chinese electric vehicle manufacturing on British soil. The endorsement comes as current Chancellor Rachel Reeves prepares for a landmark visit to Beijing in early January.
Hammond, who served as chancellor from 2016 to 2019, emphasised that whilst security concerns should never be compromised, vital economic sectors present opportunities for mutually beneficial deals. “Chinese advances in electrical vehicle technology and renewable energy technology offer us a route to delivering on our strategic objectives,” Hammond stated, drawing parallels with successful Japanese manufacturing investments in the 1980s.
Jim O’Neill, former Goldman Sachs Asset Management chairman, echoed these sentiments, highlighting the need to balance security considerations with growth opportunities. The proposition gains particular relevance following recent Society of Motor Manufacturers and Traders data revealing a concerning 30% year-on-year decline in UK car production.
Reeves’s delegation, led by HSBC chairman Mark Tucker, aims to restart economic dialogue frozen since 2019. The timing proves critical amid global economic uncertainties, particularly with Donald Trump’s threats of substantial tariff increases on Chinese imports should he return to the US presidency.
The trade mission occurs against a backdrop of domestic economic challenges, with the Bank of England noting significant uncertainty regarding the economy’s response to increased employment costs. The visit potentially signals a measured approach to Anglo-Chinese relations, moving away from what Hammond described as the overhyped “golden era” rhetoric of previous governments.
Treasury sources indicate potential reciprocal arrangements, suggesting Chinese manufacturing investments could be exchanged for enhanced UK access to Chinese financial services markets. This strategic approach aims to foster economic growth whilst maintaining appropriate boundaries in the bilateral relationship.
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