Chancellor George Osborne wants to forge a “golden relationship” between the UK and China.
Part of this effort involves linking British stock markets with those in China.
Osborne announced a “landmark feasibility study” into the idea, which would allow UK and Chinese shares to be traded in both nations.
In this context, a ‘feasibility study’ is an evaluation and analysis of a project to determine whether it is feasible and makes economic sense.
Linking the markets would make trading easier and result in more Chinese investors holding stake in UK companies and vice versa.
According to the Chancellor, the plan would create more global opportunities for British investors and help Chinese companies have greater access to international finance.
In addition, the People’s Bank of China agreed to issue short-term RMB bonds in London- the first time these bonds will be issued outside of China.
Osborne said in a speech at the Shanghai Stock Exchange that the UK and China would “stick together” through market turmoil and slowing Chinese economic growth.
“Whatever the headlines, regardless of the challenges, we shouldn’t be running away from China,” said Mr Osborne.
He went on to say that the two economies should work together to make the UK “China’s best partner in the West”.
“I want to see our stock markets in London and Shanghai formally connected, with UK firms raising funds from Chinese savers, and Chinese firms listing in London,” he added.
“This week, we’ve announced with the Chinese government and this stock exchange a landmark feasibility study to look at how we could do this.”
Osborne is currently in the middle of his five-day trade trip in China. Yesterday he announced that the UK would guarantee £2 billion into the new Hinkley Point nuclear power plant.