Strengthening the UK-China financial partnership

Introduction

Just a few people know that I used to be a fairly serious mountaineer. During my years living in Hong Kong, I would often escape the city to hike across the hills in the remoter parts of the New Territories. And more challenging climbs in the European Alps usually involved long days navigating glaciers, cliffs of ice and knife-edge ridges to get to the summit. 

These days you’re more likely to find me grappling with a mountain of paperwork than Mont Blanc. But much like mountain climbing, I’ve found that the path of economic and regulatory partnership isn’t always a straight line.

We routinely encounter false summits and switchbacks. Or as Vice Minister Liao put it recently, some ‘ups and downs.’ But the view from the top – shared growth, greater financial resilience, global influence – is worth the effort.

With the success of January’s UK-China Economic and Financial Dialogue, I am optimistic that financial cooperation is on the rise. The Chancellor’s visit to China, accompanied by Nikhil Rathi, our Chief Executive, showed that this partnership matters at the highest political and regulatory levels.

But as every climber knows, intent alone doesn’t get you to the top. And today I want to outline a route that I believe leads to deeper, more durable UK-China financial cooperation. 

Landscape

When I speak with regulatory counterparts around the globe, it is clear that we are grappling with many of the same challenges. 

Tackling cross-border fraud. Harnessing technological change. How to support economic growth. And one of the basic issues which affects both the UK and China concerns demographic change. Ageing populations are increasing the pressure on all our public pension systems, and helping people to build lifelong financial resilience is an urgent imperative.

Through our new strategy, the FCA is putting long-term savings and investment at the heart of our agenda to meet this demographic challenge. Focusing on how we can deepen trust in the financial system and re-balance our collective risk attitude, supporting economic growth and improving lives.

On the supply side, we are reforming capital markets and opening up new channels for investment, so that more firms can get into the shop window and raise the capital required for growth.

Last year, we made the biggest reforms to the UK’s listing regime for decades. This year we are implementing a new prospectus regime, and developing a new market for trading private shares (PISCES).

On the demand side, we are focused on unlocking domestic savings – supporting households to become more confident long-term investors and to secure better retirement outcomes.

This includes a new Value for Money Framework for workplace pension schemes which emphasises long-term investment returns over short-term costs. We have also proposed a new model for targeted support in pensions, enabling far more people to have access to the type of guidance needed when making the critical decisions on which their financial futures depend. 

I know China is also exploring how to mobilise retail investment to strengthen its pension system and meet the changing needs of the population. And in this shared challenge lies shared opportunity.

For us to work together – across areas as diverse as green finance, wealth management, and supervision – we need to build systems that are not only resilient in the face of today’s risks, but are also able to engage with tomorrow’s realities.

Of course, we face these generational challenges at a time when the terrain of regulatory cooperation has undeniably become more rugged. 

Geopolitical uncertainty, economic and regulatory fragmentation, and emerging risks in tech and data governance are all shaping the global conditions in which we operate.

In this context, there is a risk of an ‘each-to-their own’ mindset taking hold. 

But it’s partnership, not isolation, that has always been the way to achieve lasting progress – that’s just as true when regulating complex financial markets as it is when climbing mountains. And it is against this uncertain backdrop, that successful partnerships matter more than ever. 

The UK-China financial relationship can be a stabilising force – a practical example of how two major but very different world economies can build trust, deliver mutual benefit, and support global market integrity.

Making the most of existing opportunities

Like any serious ascent, there are several stages for us to consider. The first is about making the most of the ground we have already gained – making sure existing opportunities are fully functioning and utilised.

Stock Connect was a watershed moment when it launched in 2019. In the first 2 years, it led to listings worth almost 6 billion dollars on the London Stock Exchange.

It was also the first time that any foreign company was able to list in mainland China. A sign of our ambitions for deeper UK-China market integration, opening the door to greater capital flows in both directions.

But technical obstacles have so far prevented us from realising Stock Connect’s full potential.

Now is the time to unblock those issues. The FCA is ready to play our part – working closely with UK colleagues, including the Treasury and the London Stock Exchange, as well as with our Chinese counterparts.

It speaks volumes that, after we overhauled UK listing rules last year, a Chinese company was the first to take up the opportunity to complete a secondary listing in London. We have also seen a growing number of Chinese asset managers listing ETF products in London, including renminbi-denominated ones. We want to see this kind of activity developing further, expanding market access channels on both sides. 

The same collaborative spirit is powering our progress on green finance, which is not just a regulatory priority, but a major growth driver for the financial sector. The UK is a global leader in green finance innovation, with around half of the world’s traded green bonds listed here. And China has made the transition to a greener economy a central pillar of its long-term growth strategy, rapidly scaling its green finance ecosystem. So there is undoubtedly plenty of room for us to do more together.

China’s decision to list its first foreign-issued Sovereign Green Bond in London a few weeks ago was an important next step, and we are encouraging UK firms to seize opportunities in China’s growing green finance market too – from transition finance to biodiversity-linked investment.

The UK-China Green Finance taskforce will help to build further momentum, but sustainability disclosures are an essential part of the effort. Shared disclosures create shared understanding. They help capital flow with transparency, accountability and purpose. And they’re key to market integrity. So we welcome the International Sustainability Standards Board’s (ISSB) efforts to create, for the first time, a joint language for these disclosures.

We are in the process of aligning our standards with the ISSB and have been pleased to see our Chinese colleagues reaffirm their commitment to international alignment. The Bank of China’s decision to join the Taskforce on Nature-related Financial Disclosures is another promising signal. 

Forging new paths

These examples are important footholds. But we also need to continue forging new paths – being open to opportunity, ambitious, and smart about what comes next. With China’s pool of private wealth growing, Chinese consumers are looking to diversify their investments abroad to boost returns and secure retirement funds. UK markets are perfectly placed to support that demand. 

We are second only to the US in asset management. And around half of UK assets under management are held on behalf of overseas clients – a reflection of the strong trust our system enjoys.

Firms like Schroders have already deepened their presence in the Chinese market, establishing a joint venture with Bank of Communications, as well as a wholly owned fund management company.

These aren’t short-term tactics; they reflect a long-term alignment with China’s evolving financial landscape. And taken alongside the growing role of UK institutions in China’s reinsurance market, it shows that firms can see the potential for far greater collaboration between our markets. 

The proposed China-UK Wealth Connect scheme could be a transformational next step. A seamless platform for cross-border wealth management. Enabling Chinese savers to access UK-managed funds through reliable regulatory frameworks. Giving UK firms a gateway to one of the fastest-growing pools of global private capital.

To ensure success, it must be designed with openness, strong governance, and mutual benefit at its core, and the FCA is working with our UK and Chinese counterparts to help shape this opportunity. Because if we can build the right structures now, the benefits for both our economies will be lasting and significant. 

Improving tools

But as we climb higher together, the landscape becomes far more challenging. Innovation accelerates. Markets become more complex. Risks shift in shape and speed. We need stronger tools to help us navigate this more difficult terrain. 

One of the most promising new tools will be the Memorandum of Understanding (MoU) now being developed between the FCA and China’s National Financial Regulatory Administration.

This will be critical to provide the mechanisms needed to share information swiftly, supervise firms effectively across borders, and promote market openness – all while maintaining standards of financial integrity and consumer protection.

For regulators and firms alike, fast and efficient exchange of data is vital to manage the risks that inevitably accompany increased cross-border activity. Good data underpins good judgement. It enables resilient markets, helps supervisors identify misconduct early, and empowers firms and consumers to make sound decisions.

Of course, we recognise the sensitivities involved in allowing certain types of data to leave China. So, we want to work collaboratively on arrangements that allow this to happen in a way that is secure, respectful of domestic laws, and beneficial to both sides. 

I’m pleased with the progress made under January’s EFD, where both sides underlined the importance of data-sharing, and we will now work together with Chinese regulators to put this high-level commitment into practice. 

At the same time as strengthening our bilateral cooperation, it is important that we play an active role in shaping debates and standards that affect us all as a global community. The FCA has been clear that we will continue to advocate for the global cooperation and openness which benefits us all, and we hope China will join us in supporting this approach.

Our preference is to do so via established multilateral bodies such as the Financial Stability Board or the International Organisation of Securities Commissions. These are the fora where the rules of modern finance are shaped, so it is really important that China’s participation remains active and collaborative. 

Conclusion

As any mountaineer will tell you, the best routes are rarely the easiest. But they are the ones worth taking.

The UK and China, although very different economic systems, share similar challenges, including the longer-term demographic challenge I mentioned at the beginning. 

The EFD has set out a work programme that is already re-energising our relationship.

The progress we’ve made so far, through dialogue and agreement, gives me confidence that we have the skill and the will to reach those new heights.

But we need to keep climbing, together.