UK's Hammond: talk of warship deployment complicates China ties

By Kylie MacLellan

LONDON (Reuters) - Britain's talk of deploying a warship in the Pacific has complicated its relationship with China, finance minister Philip Hammond said on Thursday.

As Britain prepares to leave the European Union at the end of next month, its biggest foreign and trade policy shift in more than 40 years, it is seeking to strengthen diplomatic relationships and trade ties with countries around the world.

Earlier this month defence minister Gavin Williamson said Britain would use military force to support its interests after Brexit and outlined plans to deploy a new aircraft carrier to the Pacific, where London has been seeking to demonstrate its influence in relation to China.

British media reported that China had cancelled trade talks with Hammond because it was upset about Williamson's speech.

When asked directly on BBC radio if the relationship had been damaged by Williamson's threat, Hammond said: "It is a complex relationship and it hasn't been made simpler by Chinese concerns about royal navy deployments in the South China Sea."

A Ministry of Defence official said the speech had been cleared in advance by both Hammond's department and Prime Minister Theresa May's office.

"STRONG AND CONSTRUCTIVE"

Asked whether the prime minister agreed with Hammond that the comments had complicated ties, May's spokesman said Britain's relationship with China was important.

"We have strong and constructive ties on a range of issues and we will continue to do so," he said.

UK exports to and imports from China hit a record high in 2017. China was the UK's sixth largest export market that year, worth 22.3 billion pounds ($29.15 billion) and its fourth largest source of imports, worth 45.2 billion pounds, according to the House of Commons Library.

In his speech, Williamson announced that the first mission of the HMS Queen Elizabeth aircraft carrier would include work in the Mediterranean, Middle East and Pacific regions.

In August a different British warship sailed close to the Paracel Islands claimed by China in the South China Sea, prompting fury in Beijing.

Hammond said he was disappointed that the Chinese had reacted in the way they had to Williamson's comments.

"This is entirely premature, the aircraft carrier isn't going to be at full operational readiness for another couple of years, no decisions have been made or even discussed about where its early deployments might be," Hammond said.

Asked if Williamson should be reined in, he said: "I think that it's very important that we manage this relationship with China very carefully."

($1 = 0.7650 pounds)

(Reporting by Andy MacAskill, Kate Holton, Kylie MacLellan and William James; editing by Guy Faulconbridge and Gareth Jones)