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George Osborne to build bridges in Shanghai Stock Exchange visit

Published 21/09/2015

George Osborne is visiting China
George Osborne is visiting China

George Osborne is taking a trip to what he calls the "epicentre" in China of the world's summer of financial turbulence to pledge that Britain will "stick together" with the east Asian giant.

The Chancellor has chosen the Shanghai Stock Exchange as the venue for a high-profile speech in which he will paint an upbeat picture of China's prospects and for the future of the UK-Chinese relationship.

And he will set out his ambition to establish the City of London as China's "bridge" to Western financial markets through a package of measures agreed in Beijing with vice premier Ma Kai on Monday.

The Chancellor will then travel on to a venue with strong resonance for Western concerns over human rights in China - Urumqi, the capital of the western Xinjiang province, scene of protests in 2009 by members of the Uyghur ethnic minority which left a widely disputed official death toll of 197.

In his address at the Stock Exchange, Mr Osborne will seek to calm the nerves of investors in the West, who have been spooked by the recent slowdown in China's growth, a snap devaluation of the yuan and sharp falls in prices on the Shanghai market - including an 8.5% slide on a single "black Monday" in August.

"Whatever the headlines, regardless of the challenges, we shouldn't be running away from China," he will say. "Through the ups and downs, let's stick together ... to grow our economies."

He will set out how he expects Britain to benefit from plans agreed with Mr Ma for a feasibility study into connecting the UK and Chinese financial markets.

Linking the markets would allow the UK to benefit from Chinese growth and offer support to its economic and financial reforms, while giving Chinese firms greater access to international finance, he will say.

He will describe as a "significant step" the People's Bank of China's announcement that it is to issue short term bonds denominated in the country's renminbi currency in London - the first time this has been done outside China.

Meanwhile, Agricultural Bank of China announced it will issue an renminbi-denominated green bond in London.

During his five-day trip, Mr Osborne has repeatedly brushed off concerns over China's economic and financial stability, pointing out that the slowdown to 7% GDP growth after years of double-digit rises still puts the People's Republic in a position to become the world's largest economy by 2030 and create a new economy the size of Britain's over the next five years.

"My message on this trip is that Britain can't run away from China. Quite the opposite, Britain should run towards China," he has said.

"We should be doing more business with China, we should be better connected with China economically, our financial institutions should establish stronger links."

Speaking in Shanghai, he is expected to say that he "very deliberately chose" to come to "the epicentre of the volatility in financial markets this summer" to make his case for ties with China to be strengthened, not weakened.

"My message is clear," he will say. "Through the ups and downs, let's stick together.

"Let's stick together to grow our economies. Let's stick together and make Britain China's best partner in the West. Let's stick together and create a golden decade for both of our countries.

"Britain and China: we'll stick together."

Mr Osborne's visit, which covers thousands of miles and takes in four major cities, has so far been devoted to deepening the UK's economic, financial and cultural links with China.

On Monday, he confirmed a £2 billion Government guarantee for Chinese investment in the proposed Hinkley Point C nuclear power plant in Somerset, and indicated he expected it to pave the way for further deals, including a majority Chinese-owned nuclear generation facility at Bradwell in Essex.

Also agreed in the annual UK-China economic and financial dialogue was a £50 million nuclear research centre, to be jointly funded by Britain and China and headquartered in the UK.

Some £6 million of UK Government cash was pledged to showcase British cultural treasures in China, including manuscripts and first editions of authors from Jane Austen to Sir Arthur Conan Doyle and tours for Mandarin versions of Shakespeare and First World War drama War Horse.

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