Fresh questions have been raised about Beijing’s economic influence inside Britain after MI5 chief Sir Ken McCallum said the spy agency had disrupted a plot from China as recently as last week.
There have also been reports that China accessed data from UK Government computers, though the Cabinet Office rejects claims that the “most sensitive” information had been breached.
Sir Keir Starmer has been urged to carry out an audit of Chinese involvement in the UK’s critical infrastructure, and is facing mounting criticism over Labour’s attempts to boost economic ties with Beijing since winning power last year.
MPs and China experts have urged the Prime Minister to look again at existing Chinese investment in Britain’s energy, transport and manufacturing, and limit any further ownership by Chinese firms.
Despite a deteriorating relationship between London and Beijing in the years after the David Cameron government, in recent years, China has still invested billions of pounds to secure its place in the UK’s critical national infrastructure.
Heathrow, warehouses and shipping
China Investment Corporation (CIC), the country’s sovereign wealth fund, has a 10 per cent stake in Heathrow airport.
China hawks worry that even with small stakes, Beijing could leverage its influence over such a key site for political gain.
Beijing’s wealth fund reportedly owns more than 250 properties and sites across the UK – many of them transport hubs and distribution centres.
Felixstowe is the UK’s biggest container port (Photo: Toby Melville/Reuters)The CIC owns a controlling share in Logicor, a warehousing giant which owns or manages a huge network of sites for retailers – ranging from Amazon to Marks and Spencer.
Influence is also felt at UK ports. China’s state-owned shipping giant Cosco and other Chinese-led companies are estimated to control 80 per cent of container trade at Felixstowe.
Labour’s China policy “downplays the threat and plays up perceived economic opportunities”, said Luke de Pulford, executive director of the Inter-Parliamentary Alliance on China (Ipac). “It’s very worrisome.”
Ipac – which brings together international politicians to study the threats posed by Beijing – wants the Government to do a full “audit” of existing Chinese ownership in key sectors.
Ministers should be willing to “root out” investment from critical infrastructure if necessary, said De Pulford. “We need to audit our dependency [on China] in key industries and try to reduce it.”
Nuclear power
In 2022 the Conservative government forced China General Nuclear (CGN) out of the Sizewell C nuclear power plant project in Suffolk, using £700m of taxpayer cash.
However, CGN still owns a 33 per cent interest in the Hinkley Point C scheme in Somerset. French energy giant EDF owns the rest.
Hinkley Point C will be the first new nuclear power station in the UK in 20 years (Photo: Finnbarr Webster/Getty)George Magnus, associate at the China Centre at Oxford University, said the collapse of the China spying case could “stir up” fresh scrutiny over the Government’s economic policy.
Magnus said an audit of critical infrastructure would be a good way for ministers and intelligence agencies to “run the rule” over the UK’s dependence on Chinese investment in key sectors.
“We need to be more inquisitive over equity stakes [bought by Chinese companies] in UK entities,” said the economist.
He warned that attempts to force existing Chinese companies out would be difficult but more “restraints” could be imposed on any new Chinese investment.
National Grid and green energy
The China Investment Corporation has a 8.7 per cent stake in Thames Water. It is also part of a consortium that owns Cadent – the National Grid’s gas distribution business which supplies 11 million homes in the UK.
There has been increasing Chinese investment in Britain’s wind and solar power. China’s offshore wind company Mingyang was chosen to provide turbines for the Green Volt North Sea wind farm.
Mingyang will be providing wind turbines in the North Sea (Photo: Ben Birchall/PA)Mingyang also wants to build a turbine plant in Scotland. The Government is yet to decide on the factory. Labour is open to investment “where it supports growth and jobs” and “does not compromise our national security”, said energy minister Michael Shanks.
Professor Steve Tsang, director of the SOAS China Institute in London, said there were two potential threats to consider with Chinese investment: espionage and disruption.
He said potential sabotage of infrastructure controlled by a Chinese manufacturer was the bigger of the two risks “in extremity” – should the UK-China relationship sour badly.
Professor Tsang said the Government faced difficult decisions in distinguishing between desirable Chinese imports in the energy sector, and risky Chinese involvement in energy infrastructure.
“Does it really matter about solar panels on people’s roofs? They are nearly all Chinese-made now,” he said.
“But if you are looking at [investment] that can stop a critical part of our [energy] infrastructure, that’s a real issue. If you had Chinese wind turbines that require regular software updates, then you could be vulnerable.”
EVs, buses and taxis
Chinese electric vehicle (EV) giant BYD said this month that the UK is now its largest market outside China. BYD also reached a deal to manufacture London’s latest line of electric double-decker buses.
Chinese carmaker Geely – which owns a 17 per cent stake in Aston Martin – put another £120m into LEVC, the maker of London’s iconic black cabs, last year.
Chinese EV brand BYD has become popular in the UK (Photo: Jung Yeon-Je/AFP)Magnus said not all manufacturing needed to be considered critical infrastructure: “If BYD wanted to build a new car plant, for example, I don’t see in principle why we should be opposed to that.”
De Pulford said the auto industry was another area of concern, however: “We will become a dumping ground for China’s EVs, and it will undercut and undermine what little remains of our car industry. It will again put us in a position of dependency.”
Oil and steel
The UK Government stepped in to take control of the Scunthorpe steelworks from Jingye – the Chinese owner of British Steel – earlier this year.
Jingye said the plant was losing £700,000 a day and threatened to close it. Despite emergency action, the future of the site is uncertain. The hunt for a new buyer appears to have stalled.
Grangemouth stopped processing crude oil earlier this year (Photo: Jeff J Mitchell/Getty)Starmer’s Government has faced calls from the SNP and some Labour MPs to nationalise the Grangemouth oil refinery – partly owned by Chinese company PetroChina – in Scotland.
The site near Falkirk stopped processing crude oil in April. It is now downsizing to become an import terminal for already-finished fuels.
Brian Leishman, MP for Alloa and Grangemouth, previously told The i Paper no foreign power should have any control over such a “vital” asset.
Huawei – 5G and solar tech
The Tory government banned Chinese tech giant Huawei from any involvement in UK’s 5G network in 2020. It cited security concerns, amid claims the firm’s kit could be used for surveillance.
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Ministers also ordered that all mobile network operators remove any Huawei equipment from the 5G network by the end of 2027.
The UK’s mobile providers – having warned the ban would slow the rollout – had not yet fully stripped the network of Huawei equipment by the time Labour took office, according to a 2024 report.
Huawei is now manufacturing solar inverters used in the UK. The devices allow solar energy to move into the grid.
Professor Tang said the Government had a very difficult balance to strike, with Chancellor Rachel Reeves still keen to get more investment and trade from China to boost Britain’s sluggish growth.
“I would say you don’t really want to be completely economically de-coupled from China,” said the SOAS expert. “As long as the economic relationship does not threaten national security.”
De Pulford said the collapsed spy case had already “shifted the window on thinking on China” among MPs at Westminster – but worries that the Treasury could thwart any significant revaluation of policy.
“We walk blindly into the traps because we’re blinded by short-term greed.”
A Government spokesperson said: “We would never let anything get in the way of our national security. Investment in the energy sector is subject to the highest levels of national security scrutiny.”
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