A Policy of Omertà on China Policy is No Longer Tenable

The Labour Party’s election manifesto declared that ‘After 14 years of damaging Conservative inconsistency over China, Labour will bring a long-term and strategic approach to managing our relations.’ On coming to power, the government stuck to the uninformative slogan of ‘cooperate, compete, challenge’ and bought time for consultation and deliberation by launching a ‘China Audit’ as a platform for its coming China strategy.

The China Audit aimed for four outcomes:

• A limited public document.
• A non-public ‘strategic framework’ for government.
• Clearer guidance to business, academia and others on how to engage with China.
• A review of China expertise and capacity within government and outside, with measures to boost resilience.

The China audit’s delivery was promised for ‘spring’ 2025. Springs are elastic, and this one was stretched to its linguistic limit. The then Foreign Secretary, David Lammy, finally unveiled it to Parliament on 24 June. ‘Unveiled’ is a generous description, because Lammy said that ‘Honourable Members will understand that much of the audit was conducted at a high classification and that most of the detail is not disclosable without damaging our national interests.’

This begs the question of how the government can fulfil its four aims. There are three government classifications: official sensitive, secret and top secret. Presumably, Lammy’s ‘high classification’ means secret. Civil servants able to read secret documents must be vetted. Very few are, even some senior ones in China facing departments. If they are not able to read the ‘framework document’, how is the government to ensure consistent policy when economic, security, environmental and other aims vary across departments?

The same applies to those outside government. Dame Emily Thornberry, head of the House of Commons Foreign Affairs Committee, rightly pointed out that the audit and strategy should ‘apply to government, local government, business, universities and particularly the technology sector’. She continued: ‘The Government says the purpose of the audit was to ensure that we have a consistent attitude towards [China] – how can we do that if we don’t know what it is?’ One aim of the audit was to increase consultation with outside experts, but how are they to tailor their advice to achieve realistic outcomes if they have no clear parameters?

The China Audit has been just one instance of delay and seeming indecision over China. Another is repeated postponement on whether to allow the Chinese to set up a vast new embassy on the site of the Royal Mint in the City. On the face of it, this is a simple decision. If there are indeed sensitive cables running under the embassy, and if they cannot be rerouted, the answer must be negative.

Another objection is that a huge embassy will be a centre of espionage. But an embassy is a focus of surveillance by the security service and is a poor place from which to run agents – the Chinese usually meet their agents in China or in third countries. It could house electronic attacks, but if the site is too convenient or close to sensitive installations, again the decision is easy: no.

As for fears about dungeons being used for holding CCP opponents seized off the street, not since Sun Yat Sen in 1896 has there been a case of someone kidnapped on the streets by the Chinese. A ‘secret police station’ or safehouse would be a better place to house a victim, in the unlikely event of this happening.

The third issue which engenders doubt about the current government’s ability to deal with China is the recent Cash/Berry alleged espionage case. Slowly the government and Crown Prosecution Service (CPS) have had to release more information. Yet questions remain, notably, what changed in the few days in September between witnesses being prepared for court and the collapse of the trial? And why, even if the government was not willing to provide sufficient evidence for the commonsense notion that China is a threat, the precedent established in the Bulgarian spy case earlier this year was not followed? There, the judge ruled that the jury was capable of deciding the threat question, based on evidence from experts, not necessarily in government.

Another area where the government might have, but has not, taken action unwelcome to the CCP is putting China on the enhanced tier of the Foreign Interests Registration scheme under the National Security Act. Nor has it followed the United States and the EU in proposing measures against the Chinese companies Shein and Temu, whose economic model of shipping products directly from China by air is deleterious to the environment, British retail jobs, tax receipts and to ensuring the safety of products.

A Policy of Omertà

The policy of the Labour government has been to say as little as possible. This was confirmed by two senior officials in China facing roles. The silence has been deafening. In December 2024, the prime minister gave his foreign policy address at the Lord Mayor’ banquet. In the myriad of issues he touched upon, he mentioned only that he had met Xi Jinping and that he deplored the previous government’s disarray on China relations. On the same day, the defence minister and the minister of state for business and trade both spoke at the London Defence Conference. Neither mentioned China in their speeches and both shied away from the subject when questioned. Even after this author, in attendance at the conference, raised the subject of China, none gave intimations of policy intentions.

The prime minister, the chancellor and sundry ministers have said that national security is their number one priority. They are also right that China is important to the UK economy; right to avoid unnecessarily aggressive language; and right on the importance of ministerial visits to China (not least to educate ministers on CCP realities). But putting national security first requires making clear to China where the red lines are and calling the CCP out when it crosses them. The Treasury – and it is the Treasury which has the biggest say in China policy, despite having no middle or senior officials with extensive China experience – worries that trade and investment will be threatened. It should, as the Chinese say, seek truth from facts.

Firstly, the government should talk not of trade, but of exports. Ministers variously claim that China is the UK’s third or fourth largest trading partner. But imports are China’s business – except where their subsidy undermines the UK economy and employment. Ministers should talk about exports. These were £29.7 bn in 2024, 3.4% of total exports, and China was the UK’s sixth biggest export destination, according to figures available from the Department of Business and Trade in September 2025. This is by no means negligible. But politics interferes with China business less than supposed. No country which has been in the diplomatic doghouse with the CCP has seen its exports fall during that period. In the case of the UK, exports rose during the freezing of relations in 2012-13 following the Dalai Lama’s meeting with the prime minister, and hit a record in 2022 (slightly less in 2023), when ministerial meetings did not happen. Exports fell during the Osborne ‘Golden Era’ of 2016-7. The previously mentioned figures from the Department of Business and Trade show also that exports fell in 2024 by 12.1%. This downward trend may continue, not just because the Chinese economy is stuttering, but because of CCP policies of ‘self-reliance’ and ‘dual circulation’ (domestic wherever possible, foreign only if unavoidable).

The investment picture is similar. For 2024, the percentage of the UK’s foreign investment stock coming from China was 0.2%. This is an understatement, because the figures do not include investments under a certain size and because some Chinese funds invest through Luxemburg, Bermuda and other places. More relevant are current flows, but the government does not vouchsafe these statistics. They are likely to be small. Figures for Chinese investment in the EU and UK were €6.8bn (£5.8bn) in 2023 and €10 bn (£8.5 bn) in 2024. The majority of those sums went to the Hungarian motor industry (the Rhodium report notes a sharp drop for the UK, Germany and France). Since 2016, the CCP has reduced investment, while concentrating funds on technology, often in areas where the UK should not want the involvement of a hostile power or where serious dependencies risk being created. It is also worth noting that pre-covid, at the high tide of Chinese investment in the UK the number of jobs created and maintained was 9,000 over three years – and 1,700 in the third year.

The government does not put out statistics for investment in gilts, but Chinese buying is unlikely to be large. As for the investment of British companies in China, this is important to the UK, but also to China. Officials also worry about whether the CCP could harm HSBC and thereby the UK’s tax receipts from the bank. Here too the worries are overwrought.

Wind Power and Electric Vehicles (EVs)

The current policy of omertà cannot continue. Big decisions are needed now over permitting China to build factories in the UK to supply wind turbines and EVs. This is where national security and Chinese investment collide head-on. In both areas the risk is of creating important dependencies upon the good will of the CCP. Through the cellular IoT modules (CIMs) in turbines and vehicles, the CCP will have the power to switch them off, or to disrupt supply of these vital components. Covid and recent Chinese measures on rare earths make it clear that China uses dependencies – and CIMs affect a wider swathe of the economy and society than rare earths.

EVs bring a further danger. They are surveillance machines on wheels. Their sensors, cameras, lidar, geolocation, microphones relay vast amounts data to the car companies. Tesla engineers have been sacked for viewing video material taken from inside private cars. The data on smart phones connected to a vehicle’s audio system is vulnerable. It would be naïve to believe the promises of BYD or MG that this data would not get back to China. Once again, it is the CIM which is crucial, since it is the gateway to data entering and leaving EVs. In late 2022, the security services stripped down the prime minister’s car because data was emanating through the ‘e-sim’ (in other words, the CIM) to China, with the ownership of the car confirmed to this author by a senior government official. Here was a case where the car was not Chinese, but the CIM was. The firmware of Chinese CIMs being updated regularly by the Chinese CIM manufacturer provides an opportunity to install malware, taking advantage of the size of installation; the lines of code are too numerous to be checked with every update.

Conclusion

There is a science and technology war being waged by the CCP against the US and its allies. Senior Chinese leaders have been clear that this is more crucial than the trade war. The confidence of allies and Britain’s place in the ‘Five Eyes’ intelligence alliance add further considerations: the White House has queried the policy over the new Chinese embassy and the chair of the Congressional Select Committee on Competition with the CCP has expressed concern over the collapse of the recent espionage trial. All this complicates the already tough task for the government of reconciling national security, economic prosperity, climate change and public and parliamentary opinion.

A clear government strategy for China is needed to provide guidance, but also to let the CCP understand our policies and red lines. Essential too are better Whitehall co-ordination on China, reinforcement of already existing structures under the National Security and Investment Act, the Procurement Act and expansion of the Research Collaboration Advice Team.

Above all, it requires better understanding of the CCP and its ways. The KGB defector Oleg Gordievsky said that in dealing with democracies, authoritarian states only respect strength. Beneath the government’s lack of clarity and consistency, strength is difficult to detect. Ministers appear frit. They do not need to be. The CCP barks loudly, but bites softly.

© RUSI, 2025.

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