Britain's finance minister George Osborne called today for closer business ties with China as he visited its commercial hub of Shanghai, despite slowing growth and stock market volatility in the world's second-largest economy.
Osborne, Britain's Chancellor of the Exchequer, visited the Shanghai stock exchange, which has seen its benchmark index plummet nearly 40 per cent since June as a bubble bursts, while worries over flagging Chinese growth have shaken world markets.
A day earlier Osborne agreed with top Chinese officials in Beijing to study the linking of trading on the London and Shanghai bourses, and the possibility of China's central bank issuing short-term bonds denominated in the yuan currency in London.
Also Read
"Whatever the headlines, regardless of the challenges, we shouldn't be running away from China," Osborne told business leaders and students packed onto the trading floor of the exchange.
"Let's stick together to grow our economies," he said, adding he deliberately chose to visit the Shanghai bourse, which he called the "epicentre of the volatility in financial markets".
China recently revised downward its 2014 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.
"China's undergoing difficult change -- but it's still a huge contributor to our economic future," Osborne said.
Valuations on the Shanghai exchange alone have dropped by more than USD2.4 trillion since mid-June, after a 150 per cent surge in the previous 12 months, lifted by a borrowing-driven rally encouraged by authorities.
Chinese officials responded with a rescue package, whose hallmarks include banning big shareholders from selling and government buying of shares.
The package has raised questions over Beijing's management and drawn criticism for running counter to promised economic reforms.
But the Shanghai market rose nearly two per cent to the day's high during Osborne's speech, and while it trimmed some of the gains later it closed up 0.92 per cent, in part because of news of the possible stocks link.
Britain and China have agreed to conduct a feasibility study on connecting stock markets, which the British Treasury said in a statement today would offer investors from both countries more opportunities and provide Chinese firms with financing.
