UK seeks ‘trade and investment relationship' with China despite spying risk

The National

8 hours ago

Ministers promised 'greater robustness and consistency' in the way the UK deals with China but acknowledged the desire for a 'trade and investment relationship' with the world's second biggest economy.
The 'China audit', which examined the extent of the UK's relationship with Beijing, recommended increasing the Government's ability to engage with the Asian economic superpower while increasing 'resilience' against the risks posed by Xi Jinping's country.
Foreign Secretary David Lammy said 'we understand that China is a sophisticated and persistent threat' – an apparent shift from the Government's previous description of it being a 'challenge'.
But he told MPs that in the past decade China has delivered a third of global economic growth, becoming the world's second largest economy and, together with Hong Kong, the UK's third largest trading partner.
'Not engaging with China is therefore no choice at all,' he said.
'China's power is an inescapable fact.'
Mr Lammy said the audit painted a 'complex picture' but 'the UK's approach to China will be founded on progressive realism, taking the world as it is, not as we wish it to be'.
'Like our closest allies, we will co-operate where we can and we will challenge where we must,' he said, vowing that meant 'never compromising on our national security'.
He said the Government was investing £600 million in the intelligence services following the audit and also taking measures to improve expertise about China in the civil service.
A summary of the audit's findings – including guidance for colleges and universities which rely on Chinese students and partnerships for vital funding – were laid out in the national security strategy.
'The challenge of competition from China – which ranges from military modernisation to an assertion of state power that encompasses economic, industrial, science and technology policy – has potentially huge consequences for the lives of British citizens,' the strategy said.
The audit underlined the need for 'direct and high-level engagement and pragmatic cooperation where it is in our national interest', signalling further high-level talks with Beijing.
'In a more volatile world, we need to reduce the risks of misunderstanding and poor communication that have characterised the relationship in recent years,' the strategy said.
'China's global role makes it increasingly consequential in tackling the biggest global challenges, from climate change to global health to financial stability.
'We will seek a trade and investment relationship that supports secure and resilient growth and boosts the UK economy.'
But the strategy acknowledged 'several major areas, such as human rights and cyber security, where there are stark differences and where continued tension is likely'.
The report noted: 'Instances of China's espionage, interference in our democracy and the undermining of our economic security have increased in recent years.
'Our national security response will therefore continue to be threat-driven, bolstering our defences and responding with strong counter-measures.
'We will continue to protect the Hong Kong community in the UK and others from transnational repression.'
The China audit recommended 'an increase in China capabilities across the national security system'.
'That includes creating the basis for a reciprocal and balanced economic relationship, by providing guidance to those in the private or higher education sectors for which China is an important partner,' the strategy said.
Shadow foreign secretary Dame Priti Patel said the Government 'has gone cap in hand to China to bail out its terrible handling of the British economy'.
She claimed 'the Government has constantly and suspiciously backed the application for this new China 'super-embassy' in London' rather than listening to concerns about security.
A final decision on the embassy, planned for Royal Mint Court in London will be taken by Deputy Prime Minister Angela Rayner's department.
🚨Statement from Chairman @RepMoolenaar & Ranking Member @CongressmanRaja on the CCP's proposed 'mega-embassy' in London:
'We have yet to receive credible assurances that the risks posed by the PRC's so-called mega-embassy in London can be sufficiently mitigated. The proposed…
— Select Committee on the Chinese Communist Party (@committeeonccp) June 24, 2025
In the latest sign of pressure from Washington over the plans, the select committee on the Chinese Communist Party's chairman John Moolenaar and ranking member Raja Krishnamoorthi warned the embassy could pose a risk to the Five Eyes intelligence alliance, which includes the UK and US.
They said: 'We have yet to receive credible assurances that the risks posed by the PRC's so-called mega-embassy in London can be sufficiently mitigated.
'The proposed structure's size and proximity to sensitive communication cables and financial centres could pose an unacceptable intelligence threat not only for Londoners, but for the UK, Five Eyes, and Europe as a whole.'