LATIKA M BOURKE: London Lord Mayor says UK needs stronger economic links with China ahead of Australia visit

The Lord Mayor of London who represents Britain’s Square Mile says the UK needs to deepen economic links with China.

The UK is struggling to kickstart its anaemic economy and the new Labor government has rushed to Beijing to boost investment in London’s lucrative financial and professional services sector, which makes up 12 per cent of the UK’s entire economic output.

Speaking to the Nightly before touching down in Australia on his first-ever visit and on a week-long mission to boost economic ties with Australian pension funds and insurers, Alistair King said the City of London also wanted more, not less financial ties with China.

“We cannot hope to be the global financial centre that we are if we are not doing business with the second-largest economy in the world,” he said in an interview at his office at Mansion House opposite the Bank of England.

“China has to play a part in any international financial centre such as London.”

Asked about supply chain concerns exposed by the pandemic that has prompted other countries including the European Union to diversify their trade relationships and derisk from China, the Lord Mayor said: “We need to deepen some economic links, I think that’s the way I would express it.”

“And I think once you’ve deepened economic links you can deal with those issues that you just mentioned.

The Lord Mayor is visiting India on his way back from Australia and will go to China later in the year.

“I’m going off there, I’m going to see how we can promote some sort of further economic activity between China and the United Kingdom,” he said.

“We’d like to see more British companies doing things there.

“And also we’d like to get some further investment in the right places.”

The UK Government has said it is conducting an audit of China relations. It will be completed in the next few months but Labour has already encouraged further Chinese investment in the meantime.

Additionally, reports have emerged that the UK Labour Party will not require higher levels of disclosure from anyone working on behalf of the Chinese Communist Party on its Foreign Influence Register Scheme.

Asked if the City of London had given its point of view to either of those matters currently being decided, the Lord Mayor said it was not “something that I’ve been asked to comment on.”

UK ‘has a lot to learn’ from Australia

Alistair King is the 696th Lord Mayor of the City of London and comes from an asset management background.

His role is steeped in history and separate from the more high-profile role of Mayor of London which catapulted former occupant Boris Johnson’s political career into Number 10.

The Lord Mayor’s role changes annually and each year the City’s global ambassador travels the world trying to drum up investment in London’s financial district, particularly in the financial services, legal and maritime sectors which dominate the City.

But he said a lot of his trip to Australia would also be a fact-finding mission, singling out the superannuation system established by the Keating government as a global leader and one Britain should follow.

“The United Kingdom has a lot to learn, particularly from the Australian pension system,” he said.

“I’m particularly impressed with the Australian super system, bringing together so many of these different pension pots into a modest number of superannuation funds.

“That’s an extremely effective and efficient system, certainly compared to the UK where we have 21,000 individual pension pots.

“To have such a conglomeration gives those pension pots more scale, it means fees are redacted plus also you can actually start to get some sort of long-term investment in there.

“That’s for the benefit of Australia.”

KMPG said that in 2023, Australian super funds returned an average of 8.62 per cent up from -3 per cent in 2022.

The average Australian super balance is $97,154. The industry is dominated by seven mega funds and the total value in assets was $4.1 trillion in the September quarter of last year, according to The Association of Superannuation Funds of Australia which said the amount made it one of the world’s largest retirement savings pools.

Alistair King will meet representatives from the Future Fund, AustralianSuper and HESTA and travel with the renowned renewable energy firm Octopus Energy Group which operates in both markets. He will visit Brisbane, Sydney and Melbourne and meet the Governors of each state.

The Lord Mayor said Australia’s superannuation system was better geared to use retirement savings to invest in the country’s long-term infrastructure and spur economic growth, something that is the Lord Mayor’s personal mission for his 12 months in the job and the stated goal of the new Labour government led by Sir Keir Starmer.

The UK’s economy is struggling to grow. Real GDP is estimated to have shown no growth in the three months to November 2024, compared with the three months to August 2024 and monthly GDP recorded just 0.1 per cent last November.