Britain's Trade Minister Calls China 'Unignorable' Amid Embassy Dispute

UK-China Trade Relations and Challenges

By Joe Cash

BEIJING (Reuters) - Britain's new business minister Peter Kyle, visiting Beijing for the first trade talks since 2018, said China's economic might made it "unignorable" but that better commercial ties hinged on moving past a long-running row on new embassies.

Kyle, on his first trip since being appointed last week, will restart trade talks under the UK-China Joint Economic and Trade Commission (JETCO).

Trade Barriers and Economic Opportunities

Britain's new business and trade secretary seeks to lift trade barriers worth 1 billion pounds ($1.35 billion) over five years, particularly in agriculture, autos and professional services.

Concerns Over Embassy Construction

But a decision due next month by Britain's housing department on Beijing's plans to build the largest embassy in Europe in London could jeopardise those ambitions, diplomats and analysts say.

Politicians and British allies have warned that China could use the site for spying.

"China, because of its emerging economic status, isn't just unignorable, it is also desirable to engage with," Kyle told reporters.

He was responding to a query whether Britain should follow the European Union in seeking to "de-risk" from the $19-trillion economy and focus on domestic industrial strategy.

"The fact that China poses so many opportunities, but also so many uncertainties, should not deter us," he added. "It should actually engage us and motivate us."

Britain's Labour government, which took office last July following 14 years of Conservative rule, seeks closer economic ties with markets outside the European Union.

Central to this strategy is attracting fresh job-creating investment from China, particularly in the northern industrial heartland.

Kyle said British Prime Minister Keir Starmer was keen to visit China, but would not be drawn on when. Starmer is likely to make the trip in early 2026, sources say.

Future Prospects for UK-China Relations

CHINA-UK TIES 'NOT ALL PLAIN SAILING'

But the row over China building a "mega" embassy at the site of a two-century-old building near the Tower of London, along with a new British embassy in Beijing, is jeopardising goodwill.

British lawmakers, the White House and the Dutch parliament have warned it could allow Beijing to conduct surveillance on sensitive infrastructure, given the site's proximity to the Bank of England and Canary Wharf business district.

Kyle said that the Chinese side understood their application to build a new embassy was independent of government, when asked about the dispute. Beijing has also been holding up Britain's bid to upgrade its embassy, diplomatic sources say.

"If China wants to have a relationship with Britain that is fit for the 2020s and fit for China as it is today and not 50 years ago and not 100 years ago, then its counterparts that it wants to trade with, to do business with, to negotiate with, must be able to have facilities fit for that time as well," Kyle added.

Beijing's building plans have stalled for three years, and were delayed again in August after it refused to fully explain several blacked-out sections in its drawings.

China is Britain's third-largest trading partner and fifth-largest export market, taking £42 billion of its goods last year, equivalent to 5.1% of total exports, the British statistics office says.

Tom Simpson, managing director for China at the China-Britain Business Council, said British business was hopeful in many areas related to tariffs and market access, including whisky, automobiles and agriculture.

"(The relationship's) not all been plain sailing, but both sides are clearly committed to keeping the dialogue constructive and restoring engagement across a wide range of fronts".

($1=0.7392 pounds)

(Reporting by Joe Cash; Editing by Clarence Fernandez)