China-UK relations under Labour: Navigating a careful reset

Diplomatic exchanges between China and the UK have been gaining momentum since the Labour government took office in July 2024, with a series of high-level meetings signalling a reassessment of bilateral ties. 

From UK Foreign Secretary David Lammy's visit to Beijing in October 2024 to Prime Minister Keir Starmer's meeting with President Xi Jinping at the sidelines of the G20 in Brazil in November last year, the interactions suggest both sides are exploring ways to rebuild engagement - albeit carefully and cautiously.

China's Foreign Minister Wang Yi is now set to visit the UK, marking the first China-UK Strategic Dialogue in seven years. 

The visit comes as Labour "audits" the UK's foreign policy stance, striking a balance between engagement and strategic caution.

Diplomatic momentum under Labour

When UK Foreign Secretary David Lammy met China's Foreign Minister Wang Yi in Beijing in October 2024, he spoke of the potential for "mutually beneficial cooperation", while acknowledging areas where the two sides have "different perspectives." 

Wang, in turn, described China-UK relations as "a new starting point", calling for deeper strategic communication and the restart of key bilateral mechanisms.

A month later, the most high-profile exchange under Labour so far took place - Chinese President Xi Jinping met UK Prime Minister on the sidelines of the G20 Summit in Brazil.

It was the first direct meeting between a British prime minister and a Chinese leader in six years. The discussion underscored both nations' interest in maintaining a stable relationship, with Xi expressing hopes for "new prospects" in bilateral ties, while Starmer called for relations that are "consistent, durable, and respectable."

January 2025 saw another step forward. UK Finance Minister Rachel Reeves traveled to China, aiming to strengthen economic ties and restart the Sino-British Economic and Financial Dialogue, which had been effectively suspended for six years. 

The talks, held with Chinese Vice Premier He Lifeng, focused on reducing barriers to investment and expanding cooperation in areas such as clean technology, life sciences, and financial services.

Reeves described the agreements reached as "pragmatic cooperation in action", highlighting that despite political tensions, economic interests remain a strong driving force in China-UK relations. 

The visit resulted in $730 million worth of deals for the UK economy over the next five years - an indication that despite broader geopolitical challenges, economic engagement is still seen as mutually beneficial.

Engagement vs. caution

Labour's approach to China differs from that of previous Conservative governments, but it remains carefully measured. 

In 2015, then-Prime Minister David Cameron declared a "Golden Era" of China-UK relations, with ambitious trade and investment agreements. 

However, ties cooled in the following years, particularly under former Tory prime ministers Boris Johnson and Rishi Sunak, with London tightening scrutiny on Chinese investment, citing security concerns.

By 2022, Sunak announced the end of the so-called "Golden Era", shifting towards a more cautious stance. The Labour government, while open to engagement, has not sought to revive that past vision wholesale. 

Instead, it has framed its policy as "cautious cooperation and challenge", indicating a more pragmatic, interest-driven relationship.

China, meanwhile, has been consistent in calling for stability and long-term engagement. While Beijing remains keen to expand economic cooperation, it has also warned against what it sees as political interference in areas such as trade and technology.

Trade and investment: A core pillar of bilateral ties

Despite political tensions, China remains one of the UK's largest trading partners. 

According to the latest figures, China is among the UK's top sources of imports and a key export market, particularly in automotive, pharmaceuticals, and financial services.

The resumption of the Economic and Financial Dialogue signals that both sides see value in keeping economic channels open. Reducing investment barriers and enhancing financial cooperation could provide a stabilising factor in the broader relationship.

The key question now is whether the recent surge in diplomatic exchanges will keep the momentum as the geopolitical landscape evolves. The Labour government appears intent on resetting the relationship while maintaining a strategic distance, a balancing act that will shape bilateral relations in the coming years.

While economic cooperation is moving forward, political sensitivities remain - from national security concerns to global geopolitical shifts. 

Whether the two nations can navigate these challenges while strengthening engagement is expected to determine the future of China-UK relations under Labour.