The chancellor’s gamble with China: What price is Rachel Reeves willing to pay for closer trading ties?
Given gilt yields are rising, the pound is falling and, all things considered, markets look pretty hairy back in the UK, it’s quite likely Rachel Reeves’s trip to China gets overshadowed by noises off.
There’s a chance the dominant narrative is not about China itself, but about why she didn’t cancel the trip.
But make no mistake: this visit is a big deal. A very big deal – potentially one of the single most interesting moments in recent British economic policy.
Why? Because the UK is doing something very interesting and quite counterintuitive here. It is taking a gamble. For even as nearly every other country in the developed world cuts ties and imposes tariffs on China, this new Labour government is doing the opposite – trying to get closer to the world’s second-biggest economy.
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How much do we trade with China?
The chancellor‘s three-day visit to Beijing and Shanghai marks the first time a UK finance minister has travelled to China since Philip Hammond‘s 2017 trip, which in turn followed a very grand mission from George Osborne in 2015.
Back then, the UK was attempting to double down on its economic relationship with China. It was encouraging Chinese companies to invest in this country, helping to build our next generation of nuclear power plants and our telephone infrastructure.
But since then the relationship has soured. Huawei has been banned from providing that telecoms infrastructure and China is no longer building our next power plants. There has been no “economic and financial dialogue” – the name for these missions – since 2019, when Chinese officials came to the UK. And the story has been much the same elsewhere in the developed world.
In the intervening period, G7 nations, led by the US, have imposed various tariffs on Chinese goods, sparking a slow-burn trade war between East and West. The latest of these tariffs were on Chinese electric vehicles. The US and Canada imposed 100% tariffs, while the EU and a swathe of other nations, from India to Turkey, introduced their own, slightly lower tariffs.
But (save for Japan, whose consumers tend not to buy many Chinese cars anyway) there is one developed nation which has, so far at least, stood alone, refusing to impose these extra tariffs on China: the UK.
The UK sticks out then – diplomatically (especially as the new US president comes into office, threatening even higher and wider tariffs on China) and economically. Right now no other developed market in the world looks as attractive to Chinese car companies as the UK does. Chinese producers, able thanks to expertise and a host of subsidies to produce cars far cheaper than those made domestically, have targeted the UK as an incredibly attractive prospect in the coming years.
And while the European strategy is to impose tariffs designed to taper down if Chinese car companies commit to building factories in the EU, there is less incentive, as far as anyone can make out, for Chinese firms to do likewise in the UK. The upshot is that domestic producers, who have already seen China leapfrog every other nation save for Germany, will struggle even more in the coming year to contend with cheap Chinese imports.
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Why is Rachel Reeves flying to China?
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Whether this is a price the chancellor is willing to pay for greater access to the Chinese market is unclear. Certainly, while the UK imports more than twice as many goods from China as it sends there, the country is an attractive market for British financial services firms. Indeed, there are a host of bank executives travelling out with the chancellor for the dialogue. They are hoping to boost British exports of financial services in the coming years.
Still – many questions remain unanswered:
• Is the chancellor getting closer to China with half an eye on future trade negotiations with the US?
• Is she ready to reverse on this relationship if it helps procure a deal with Donald Trump?
• Is she comfortable with the impending influx of cheap Chinese electric vehicles in the coming months and years?
• Is she prepared for the potential impact on the domestic car industry, which is already struggling in the face of a host of other challenges?
• Is that a price worth paying for more financial access to China?
• What, in short, is the grand strategy here?
These are all important questions. Unfortunately, unlike in 2015 or 2017, the Treasury has decided not to bring any press with it. So our opportunities to find answers are far more limited than usual. Given the significance of this economic moment, and of this trip itself, that is desperately disappointing.
World
Sky News obtains first accounts of what happened inside Syrian cities shaken by bloody violence
No checkpoint is the same, some want paperwork, others wave you through after a brief look inside – but from Damascus to Latakia, there are a lot of checkpoints, and in one way or another, you are checked every time.
It wasn’t like this just a month or two ago, but it is now after the most violent few days the country has seen since Bashar al Assad was forced from power in December last year.
We drove through cities like Jableh, on Syria’s Mediterranean coast, almost unrecognisable now.
The bustling streets, markets and shops are silent, apart from the sirens of passing General Security convoys – their armed soldiers packed on the back of pick-up trucks.
The debris of battle is everywhere, buildings are burnt out and peppered with bullet holes, glass from smashed shopfront windows spills across the pavement and spent machine gun casings litter the streets.
Cities like Jableh, on Syria’s Mediterranean Coast, are almost unrecognisable now
The debris of battle is everywhere after pro-Assad militia attacked the city
After three months of relatively peaceful times, things have dramatically changed here, all because of the events of 6, 7 and 8 March.
A Thursday, Friday, and Saturday that could determine Syria’s future.
Driving out of Jableh and over a bridge, we pass through another checkpoint, then through a deserted village, home to a community of Syrian Alawites. Shops and homes are destroyed, soldiers guard the roads in and out.
We are on our way to the Hmeimim air base, home to the Russian military in Syria.
It’s also now home to as many as 10,000 Alawites who are now camping in and around the base.
The Hmeimim air base is home to the Russian military in Syria
The site is also now home to as many as 10,000 Alawites camping in and around the area
They are seeking shelter and protection, watched on by Russian soldiers who remain inside.
Some of the thousands are in tents or under makeshift cover, others are sleeping rough or in their cars.
Thousands of people are in tents or under makeshift cover
One of many children displaced after her family were attacked by pro-Assad militia
Some are sleeping rough or in their cars
I first visited the airbase last December – then it consisted of a small cluster of shops and restaurants, established over years to service the Russian personnel.
Now the shops are shuttered and the restaurants cleared of tables to allow the families to sleep.
As I approached the gates of the base, I was surrounded by people pushing against each other, trying to get to me to tell me stories of being burnt out of their houses, or of family members killed in front of their eyes.
Crowds gather around Sky’s Stuart Ramsay to describe how their relatives were killed by pro-Assad forces
A young woman pulled me aside. “We need help, international help,” she whispered.
“We need international peacekeepers; my house was on fire.”
In the crowd, I met Adiba Shehaidi. She’s sleeping rough outside the base after escaping her village, Ain al Arous.
“They attacked us, just like that, slaughtered us, our friends, our neighbours, our children, our relatives – our in-laws, all of them, were slaughtered. They stormed the houses, shooting…” she recounted her story of escape.
“What can we say? To the world, what can we say? What was our crime?” she cried.
People in mourning after killings
Grieving relatives have described how their families were slaughtered
We were told that whole families had been killed with some buried in mass graves.
Not far away from the base, in the village of Al Sanobar – we found one. A mass grave consisting of two trenches, dug under the cover of darkness by villagers. They buried 80 people here.
Sticks had been placed in the earth to signal a body buried beneath. We are told a family of 17 are in one of the graves.
A mass grave in the village of Al-Sanobar
Sticks have been placed in the earth to show where a body is buried
Further into the village, we came across a group of men digging more graves. They told us they had found the bodies of their families, friends, and neighbours littered on the streets and in houses.
So far, they have buried 223 people, all from this one village.
Latakia, on Syria’s Mediterranean coast, is where pro-Assad fighters are accused of killing Alawite civilians
On trucks, the bodies wrapped in blankets and plastic were brought to their final resting place near their homes. Under a blistering sun a simple ceremony is held, then side by side they are buried.
These families have been devastated – their anguish obvious.
Read more:
Alawites take refuge from Syrian army
Government forces clash with Assad loyalists
Syria vows to investigate mass killings
Convoys of government security forces are now constantly patrolling all the areas where the killings took place, and they are trying to encourage the Alawites to return to their villages, saying it is now safe.
Convoys of government security forces are patrolling all the areas where the killings took place
The head of General Security, Mustafa Kunefate, told me what happened here was unacceptable and must not happen again.
He explained how Assad loyalists had attacked and killed soldiers, police officers, and civilians – filming it and posting it on social media. This, he said, led to “undisciplined groups” arriving to this part of Syria, acting “outside of the Ministry of Defence’s command”.
The head of General Security, Mustafa Kunefate, tells Sky’s Stuart Ramsay that Assad loyalists were to blame for the killings
Kunefate: What happened was unacceptable and must not happen again
“Among these groups were some with a questionable intent, many arrived with no clear instructions, simply coming to break the siege on the Ministry of Defence personnel and police,” Mr Kunefate told me.
“This resulted in chaos and a breakdown of discipline among the fighting groups that entered the coastal region.”
The scene of some of the worst fighting happened in the city of Jableh when the pro-Assad militia attacked. Much of the centre of town has been badly damaged in the fighting, and it is tense.
Security convoys patrol cities like Jableh, badly damaged during fighting with pro-Assad forces.
General Security convoys constantly patrol the city, home to Sunni civilians who were murdered like their Alawite neighbours.
Imad Bitar’s father Talal died after his car was fired upon by Assad fighters.
I met him in their family home where he told me he wants peace but believes it will only happen when Assad’s fighters are captured.
Sunni civilians in the city of Jableh were also murdered by pro-Assad fighters, including Imad Bitar’s father Talal
“We must find a way to live together, our only demand now is for the remaining factions to leave Syria and for those responsible for the regime’s crimes to face a formal trial. It’s not about sectarian divisions, it’s about justice.”
This has been a difficult time for the new government trying to unite Syria.
The massacres of Alawites at the hands of militia puts President Ahmed al Sharaa’s unity project in jeopardy.
But if there is a positive from that dreadful weekend, it is that the government acknowledges the mistakes and is promising to bring those responsible to justice.
The World with Yalda Hakim at 9pm on Sky News will feature a series of special reports on Syria from our chief correspondent Stuart Ramsay and special correspondent Alex Crawford.
Watch their latest report inside Al-Hol camp, where thousands of families affiliated to the former Islamic State group are being held by Kurdish forces in northeast Syria.
A crew has entered the International Space Station (ISS) to replace the astronauts who were stranded there for nine months.
A SpaceX capsule delivered four astronauts on Sunday on a mission to allow Butch Wilmore and Suni Williams – who have been on the ISS since June 2024 – to return home.
The Dragon craft, with the Crew-10 astronauts inside, docked with the orbiting laboratory at 4.04am UK time, around 29 hours after it had been launched on the top of the Falcon 9 rocket from NASA’s Kennedy Space Center in Florida.
Butch Wilmore (back row centre) and Suni Williams (back row right) celebrate with the rest of the astronauts replacing them on the International Space Station.
The replacement crew, including Russia’s Kirill Peskov (centre), were welcomed on board the International Space Station (ISS). Pic: NASA
NASA’s Anne McClain and Nichole Ayers, both military pilots, along with Japan’s Takuya Onishi and Russia’s Kirill Peskov, both former airline pilots, will spend the next six months at the space station.
Their mission will allow four members of Crew-9, which includes Mr Wilmore and Ms Williams, to return to Earth.
Suni Williams and Butch Wilmore during their unplanned nine month stay in space.
File pic: NASA/AP
It took several minutes for Dragon to safely dock at the ISS, in what is an automated process.
But there was about 1 hour and 45 minutes of additional safety checks before the hatch could be opened.
Mr Wilmore swung open the space station’s hatch and rang the ship’s bell as the arrivals floated in one by one and were greeted with hugs and handshakes.
How they were stranded
Mr Wilmore and Ms Williams originally planned to go to space for just eight days but got stuck on the station after their Boeing Starliner spacecraft started experiencing problems.
Technical issues left them stranded, and various attempts to bring them home were unsuccessful.
The craft encountered so many problems that NASA insisted it return to Earth empty, leaving the pilots behind until now.
‘You can hardly even put it into words’
“It was a wonderful day. Great to see our friends arrive,” Ms Williams told Mission Control after the new astronauts had been welcomed aboard.
The moments after docking with Suni Williams, centre, finally facing the prospect of returning back to Earth.
Pic: NASA/AP
The astronauts, including Japan’s Takuya Onishi, greeting one another after arrival on the International Space Station.
Pic: NASA/AP
Speaking after the successful docking, Ms McClain added: “Crew-10 has had a great journey up here and I cannot tell you the immense joy of our crew when we looked out the window and we saw the space station for the first time.
“That is such an amazing journey. You can hardly even put it into words.”
The dragon capsule was manoeuvred towards ISS before it docked. Pic: NASA
The view from the ISS as the Dragon capsule edged closer and docked. Pic: NASA
The journey back to Earth
The four newcomers will spend the next few days learning the station’s ins and outs from Mr Wilmore and Ms Williams.
Then the two of them will strap into their own capsule later in the week, one that has been up there since last year, to close out the unexpected extended mission.
The pair’s ride back arrived in late September with a downsized crew of two and two empty seats reserved for the leg back.
The Dragon capsule safely docked with the International Space Station. Pic: NASA
But more delays emerged when their replacements’ brand new capsule needed extensive battery repairs.
An older capsule took its place, pushing up their return by a couple of weeks to mid-March.
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Weather permitting, the SpaceX capsule carrying them and two other astronauts will undock no earlier than Wednesday and splash down off Florida’s coast.
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