SHANGHAI • British finance minister George Osborne voiced support yesterday for the Chinese government's commitment to financial reforms in the wake of criticism of its handling of a recent bout of market volatility.
Speaking in Shanghai midway through a five-day visit to China, Mr Osborne was on a mission to forge stronger economic ties with the world's second-largest economy, and said Beijing's switch in strategy away from an export-led growth would present more opportunities.
"If we maintain our current market share of trade with China, British exports could be worth over £30 billion (S$65.8 billion) by 2020. If China rebalances more significantly, these opportunities could be even greater," he said in a speech delivered on the floor of the Shanghai Stock Exchange.
As he spoke, giant monitors showed the real-time performance of the Shanghai Composite Index and the hard-currency Shanghai B share index - one of the first market experiments to allow foreign companies to list in China.
If we maintain our current market share of trade with China, British exports could be worth over £30 billion (S$65.8 billion) by 2020. If China rebalances more significantly, these opportunities could be even greater.
BRITISH FINANCE MINISTER GEORGE OSBORNE
The main index enjoyed a modest, short-lived rally during the British minister's speech.
Mr Osborne said he wanted to see a formal link between stock markets in China and Britain so that British firms can raise money from Chinese savers and vice versa, following up on the previous day's announcement that the two sides would conduct a feasibility study.
Previous market access schemes in China have had mixed results. The B-share market is now widely regarded as a failure, and Beijing has struggled for years to shut it down.
The Shanghai-Hong Kong Stock Connect launched last year has also failed to live up to expectations, as has the Shanghai Free Trade Zone. Both had been hailed as potential game-changing reforms that demonstrated China's intention to relax its tight grip on capital account transactions.
The Chinese stock market crash during recent months and declines in the yuan currency have dampened investors' appetite for Chinese assets. And the prospect of China easing monetary policy further at a time when the United States is expected to raise interest rates could fuel capital outflows.
China recently revised downward last year's economic growth figure to 7.3 per cent, the weakest in 24 years. In both the first and second quarter this year, growth remained stuck at 7.0 per cent.
Mr Osborne expressed confidence in China, repeating calls for Beijing to be given a greater role in the International Monetary Fund (IMF) and for the yuan to be included in the IMF's currency basket.
Responding to a question about enthusiasm for the offshore yuan, which has seen flagging investor interest after a surprise devaluation last month, Mr Osborne said investors' appetite for trading offshore renminbi, the formal name for the currency, remains "enormous" despite recent volatility, and will increase in the future.
Britain and China had jointly announced agreements on a series of initiatives on Monday, ranging from an expanded currency swap agreement, Chinese investment in a British nuclear power and more cooperation on infrastructure and energy investment.
REUTERS, AGENCE FRANCE-PRESSE