As its economic growth continues to falter, is George Osborne right to prioritise close relations with China?

Chinese Premier Li Keqiang (R) shakes hands with George Osborne before their meeting in Beijing (Source: Getty)

James Sproule, chief economist at the Institute of Directors, says Yes

No country can maintain breakneck economic growth forever, and China faces some significant challenges.

The biggest will be moving towards a system where market signals replace government initiatives.

Britain is right to want to play a leading role in this transition.

China’s GDP stands at $11.2 trillion. Even with the slowdown, it will still expand by nearly the size of the Dutch economy this year.

Its increasingly affluent middle class is already demanding more of the goods and, in particular, services which Britain excels at providing, such as legal services, which are going to be so critical to its next stage of development.

Engaging with China does not have to be a zero-sum game.

The chancellor has recognised that liberalising stock markets and financial services will smooth collaboration and let market forces take a lead in boosting trade.

There is no economic scenario in which China is not one of the driving forces of the next century. Slowdown or no slowdown, China’s economic importance is only going up.

Joshua Mahony, market analyst at IG, says No

The chancellor’s decision to prioritise increasingly close relations with China comes at an interesting time, given the negative connotations that come with anything Chinese in the business world right now.

The stock market link-up idea seems fine on the face of it, with a bigger pool of investors for both markets.

However, the Chinese investor base has proven itself to be undeveloped at best, and whether the UK markets necessarily need more “gamblers” and less “investors” is doubtful.

For all the talk of hard or soft landings in China, the fact is that we do not know how long the Chinese economy will be slowing for, nor do we know which of the Chinese economic indicators can be truly trusted for their accuracy.

Having arrived late to the Chinese growth party, the UK may find itself in the awkward position of having to help clean up the mess after everyone else has left.

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