Rachel Reeves says budget ‘non-negotiable’ on China trip – as former PM says she’s been ‘rumbled’ by market turmoil
The chancellor has said the budget is “non-negotiable” on a visit to China in the face of volatile markets back in the UK.
Rachel Reeves flew out on Friday after ignoring calls from opposition parties to cancel the long-planned trip because of economic turmoil at home.
The past week has seen a drop in the pound and an increase in government borrowing costs, which has fuelled speculation of more spending cuts or tax rises.
The Tories have accused the chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.
Former prime minister Boris Johnson said Ms Reeves had “been rumbled” and said she should “make her way to HR and collect her P45 – or stay in China”.
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Chancellor’s ‘pragmatic’ approach to China
The chancellor visits a Brompton bike shop in Beijing. Pic: AP
However, during a visit to Beijing’s flagship store of UK bike maker Brompton, Ms Reeves said she would not alter her economic plans, with the October budget designed to return the UK to economic stability.
“Growth is the number one mission of this government,” she said.
“The fiscal rules laid out in the budget are non-negotiable. Economic stability is the bedrock for economic growth and prosperity.”
The treasury added that making Britain better off will be at the “forefront of the chancellor’s mind” during her visit.
She said that “action” will be taken to meet the fiscal rules. That action is reported to include deeper spending cuts than the 5% efficiency savings already expected to be announced later this year, while cuts to the welfare bill are also said to be under consideration.
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The chancellor is being accompanied by Bank of England governor Andrew Bailey and other senior executives.
She met her counterpart, Vice Premier He Lifeng, in Beijing on Saturday to discuss financial services, trade and investment, before heading to Shanghai for talks with representatives across British and Chinese businesses.
She will also “raise difficult issues”, including Chinese firms supporting Russia’s invasion of Ukraine and concerns over constraints on rights and freedoms in Hong Kong, the Treasury said.
But it did not mention whether Ms Reeves would raise the treatment of the Uyghur community, which Downing Street said Foreign Secretary David Lammy would do during his visit last year.
Britain’s Foreign Secretary David Lammy and Chinese Foreign Minister Wang Yi in Beijing. Pic: AP
On Friday, Culture Secretary Lisa Nandy defended the trip, telling Sky News that the climbing cost of government borrowing was a “global trend” that had affected many countries, “most notably the United States”.
“We are still on track to be the fastest growing economy, according to the OECD [Organisation for Economic Co-operation and Development] in Europe,” she told Anna Jones on Sky News Breakfast.
“China is the second-largest economy, and what China does has the biggest impact on people from Stockton to Sunderland, right across the UK, and it’s absolutely essential that we have a relationship with them.”
Ed Conway analysis: The chancellor’s gamble with China
Grim economic news raises stakes for embattled chancellor’s controversial China trip
Rachel Reeves’s trip to China – the first by a British chancellor since 2019 – was always going to be controversial.
In recent years Conservative governments have been keeping Beijing at arm’s length – amid concern about espionage, the situation in Hong Kong, and the treatment of the Uyghurs.
David Cameron’s so-called “Golden Era” of engagement in the pursuit of economic investment, notoriously capped by a visit to an Oxfordshire pub for a pint with President Xi Jinping – has been widely written off as a naive mistake.
There are many – not least the incoming US President Donald Trump – who believe we should maintain our distance.
But in another era of economic turmoil, the pursuit of growth is the government’s number one priority.
This week’s difficult market news – with the cost of government borrowing surging, and the value of the pound falling – has thoroughly raised the stakes.
It is the first UK-China Economic and Financial Dialogue (EFD) since 2019, building on the Labour government’s plan for a “pragmatic” policy with the world’s second-largest economy.
Sir Keir Starmer was the first British prime minister to meet with China’s President Xi Jinping in six years at the G20 summit in Brazil last autumn.
Relations between the UK and China have become strained over the last decade as the Conservative government spoke out against human rights abuses and concerns grew over national security risks.
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How much do we trade with China?
Navigating this has proved tricky given China is the UK’s fourth largest single trading partner, with a trade relationship worth almost £113bn and exports to China supporting over 455,000 jobs in the UK in 2020, according to the government.
During the Tories’ 14 years in office, the approach varied dramatically from the “golden era” under David Cameron to hawkish aggression under Liz Truss, while Rishi Sunak vowed to be “robust” but resisted pressure from his own party to brand China a threat.
The Treasury said a stable relationship with China would support economic growth and that “making working people across Britain secure and better off is at the forefront of the chancellor’s mind”.
Ahead of her visit, Ms Reeves said: “By finding common ground on trade and investment, while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”
Altcoins may see a resurgence in the second quarter of 2025 as regulations for digital assets continue to improve, according to Swiss bank Sygnum.
In its Q2 2025 investment outlook, Sygnum said the space has seen “drastically improved” regulations for crypto use cases, creating the foundations for a strong alt-sector rally for the second quarter. However, it added that “none of the positive developments have been priced in.”
In April, Bitcoin dominance reached a four-year high, signaling that crypto investors are rotating their funds into an asset perceived to be relatively safer.
But Sygnum believes regulatory developments in the US, such as President Donald Trump’s establishment of a Digital Asset Stockpile and advancing stablecoin regulations, could propel broader crypto adoption.
“We expect protocols successful in gaining user traction to outperform and Bitcoin’s dominance to decline,” Sygnum wrote.
Increased focus on economic value ignites competition
Sygnum also said that competition would increase as the market focuses on economic value. Increased competition in a market often results in better products, ultimately benefiting consumers:
“The market’s increased focus on economic value compels greater competition for user growth and revenues, with rising protocols such as Toncoin, Sui, Aptos, Sonic, or Berachain taking different approaches.”
Sygnum added that while high-performance blockchains address limitations of the Bitcoin, Ethereum and Solana blockchains, these chains find it challenging to achieve meaningful adoption and fee income.
The report highlighted that some approaches have been more sustainable. These include Berachain’s approach of incentivizing validators to provide liquidity to decentralized finance (DeFi) applications, Sonic’s rewarding developers that attract and retain users, and Toncoin’s Telegram affiliation to access one billion users.
Aside from layer-1 chains, Sygnum highlighted that layer-2 networks like Base also have potential. The report pointed out that while the memecoin frenzy on the blockchain pushed its users and revenue to new highs, it made an equally sharp decline after memecoins started losing steam.
Despite this, Sygnum noted that Base remains the layer-2 leader in metrics like daily transactions, throughput and total value locked.
Related: Italy finance minister warns US stablecoins pose bigger threat than tariffs
Memecoins still a leading crypto narrative in Q1
Despite recent price declines, memecoins remained a dominant crypto narrative in Q1 2025. A CoinGecko report recently highlighted that memecoins remained dominant as a crypto narrative in the first quarter of 2025. The crypto data company said memecoins had 27.1% of global investor interest, second only to artificial intelligence tokens, which had 35.7%.
While retail investors are still busy with memecoins, institutions have a different approach. Asset manager Bitwise reported on April 14 that publicly traded firms are stacking up on Bitcoin. At least twelve public companies purchased Bitcoin for the first time in Q1 2025, pushing public firm holdings to $57 billion.
Magazine: Uni students crypto ‘grooming’ scandal, 67K scammed by fake women: Asia Express
It was perhaps not quite how officials, in London at least, had envisaged the announcement of the state visit would be made.
In the Oval Office, Donald Trump revealed the news in his own way.
“I was invited by the King and the great country. They are going to do a second fest – that’s what it is. It is beautiful,” he said during an impromptu Oval Office moment.
The question was, did this “fest” – which Mr Trump suggested could happen in September – amount to the much hyped second state visit for the American president?
Or was this actually just the smaller visit that had been offered two months ago as an initial bilateral visit at which the state visit would be discussed?
Back in February, Sir Keir Starmer presented the president with a letter from King Charles and the offer of a state visit.
The letter proposed an initial meeting between the King and the president to discuss details of the state visit at either Dumfries House or Balmoral, both in Scotland, close to Mr Trump’s golf clubs.
The King wrote: “Quite apart from this presenting an opportunity to discuss a wide range of issues of mutual interest, it would also offer a valuable chance to plan a historic second state visit to the United Kingdom… As you will know this is unprecedented by a US president. That is why I would find it helpful for us to be able to discuss, together, a range of options for location and programme content.”
As he revealed the news of his “fest” with his “friend Charles”, Mr Trump said: “I think they are setting a date for September…”
Sources have since confirmed to Sky News that it will amount to the full state visit.
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Sir Keir Starmer handed Trump the invite earlier this year. Pic: Reuters
‘Even more important’
It’s possible the initial less formal presidential trip may still happen between now and September. Mr Trump is in Europe for the NATO summit in June and is due in Scotland to open a new golf course soon too.
“It is the second time it has happened to one person. The reason is we have two separate terms, and it’s an honour to be a friend of King Charles and the family, William,” the president said.
“I don’t know how it can be bigger than the last one. The last one was incredible, but they say the next one will be even more important.”
His last state visit in 2019, at the invitation of the late Queen, drew significant protests epitomised by the giant blow-up “Baby Trump” which floated over Parliament Square.
The president was hosted by the Queen in June 2019. Pic: Reuters
Britain’s trump card
September is a little earlier than had been expected for the visit. It may be an advantage for it to happen sooner rather than later, given the profoundly consequential and controversial nature of the first few months of his second term.
The decision by the British government to play its “state visit trump card” up front back in February drew some criticism.
And since February, Mr Trump’s position on numerous issues has been increasingly at odds with all of America’s allies.
On Ukraine, he has seemingly aligned himself closely with Vladimir Putin. His tariffs have caused a global economic shock. And on issues like Greenland and Canada, a member of the Commonwealth, he has generated significant diplomatic shock.
A risk worth taking
Mr Trump is as divisive among the British public as he is in America. Sir Keir is already walking a political tightrope by choosing the softly softly approach with the White House.
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The UK government chose not to retaliate against Mr Trump’s tariffs, unlike some allies. Sir Keir and his cabinet have been at pains not to be seen to criticise the president in any way as they seek to influence him on Ukraine and seek an elusive economic deal on tariffs.
On that tariff deal, despite some positive language from the US side and offers on the table, there has yet to be a breakthrough. A continuing challenge is engaging with the president for decisions and agreements only he, not his cabinet, will make.
British officials acknowledge the risk the state visit poses. In this presidency, anything could happen between now and September.
But they argue British soft power and Mr Trump’s fondness for the Royal Family and pomp – or a “fest” as he calls it – amount to vital diplomatic clout.
For a special relationship under strain, a special state visit is the tonic.
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