Ahead of China visit, chancellor says UK must be ‘best partner in the west’, and develop financial and cultural links

The United Kingdom must strive to become China’s “best partner in the west” by forging ever closer economic ties that will bring benefits to all parts of the country, George Osborne has said.

Writing in the Observer ahead of a five-day visit to China, the chancellor argued that the recent volatility in the Chinese economy must not deter the UK from developing far deeper financial and cultural links with the world’s second biggest economy.

“There are those that say we should fear China’s rise – that we should somehow guard ourselves against it. But we both reject such thinking, which would leave the UK slipping behind,” the chancellor wrote in a joint article with Lord (Jim) O’Neill, the former Goldman Sachs economist, who was made commercial secretary to the Treasury after the election. “Instead we should embrace it. We want a golden relationship with China that will help foster a golden decade for this country. It is an opportunity that the UK can’t afford to miss. Simply put, we want to make the UK China’s best partner in the west.”

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Osborne and O’Neill, who are travelling with a group of business and civic leaders (including Richard Leese, the leader of Manchester city council) and heads of museums and theatres, also argue that China’s summer turbulence highlights a need for closer integration as a way to promote economic stability.

“Recent volatility should not and will not put us off. It should drive us forward, so that we integrate China’s new financial markets with our own so they are deeper and better able to absorb shocks. Then it should serve as a reminder to get our house in order so that we can deal with global difficulties.”

They will also use their visit to showcase plans for a “northern powerhouse”, and make the case that all parts of the UK need to look to China.

“We are at a critical moment in our relationship with China. We need to double our efforts to strengthen our economic links, help British firms enter the market there, and attract more investment into the UK and the northern powerhouse. Rather than standing back we must make the most of the opportunities that a growing China presents to us here in Britain.”

China’s growth has slowed sharply in recent months, as the authorities in Beijing try to shift from export-led growth to a more sustainable domestic expansion.

Crashing Chinese share prices, and a botched devaluation of the yuan in August, sent shockwaves through financial markets, stoking fears that the country may be heading for a “hard landing”.

Rapid declines in the price of oil and other commodities have been blamed on weak Chinese demand; and have sent some countries heavily dependent on exporting commodities, including Canada and Brazil, into recession.

The Federal Reserve last week delayed a long-planned rise in US interest rates, with the central bank’s chair, Janet Yellen, blaming global turmoil, including in China, for the decision to hold fire.

Next month the Queen and David Cameron will welcome President Xi Jinping to the UK on a state visit.