Government has failed to deliver on China promises, says BIST Committee

• Current approach combines the worst of both worlds: missed commercial opportunities with increasing exposure to unquantified, unmanaged risk  
• UK risks the terms of its relationship with China being set in Washington or Beijing: a recipe for neither growth nor security 
• Ministers must develop three new rules of the game' to govern trade with China 
• UK needs new China trade remedies and potentially tariffs to level playing field 
• Committee sets out plan for steps new UK administration must take 

In Parliament's first official report on doing business with China, published today, the BIST Committee warns that Government has failed to deliver on its 2024 promise of a new, strategic, long-term, consistent UK approach to China. 

The Government has embarked on a course of re-engagement with China without having finalised its China audit or published a strategy - an approach that highlights a wider failure to manage the tension between promoting economic growth and safeguarding national security and economic resilience. 

The Government's record of decision making on China such as the 11^th hour block blocking of Ming Yang's £1.5 billion wind turbine factory investment on the grounds of unspecified national security concerns after years of negotiations, or the emergency takeover of British Steel from the firm's Chinese owners has been characterised by reactivity, inconsistency, and opacity. 

Successive governments have failed to reassure the security community, the public, or Parliament that they have taken adequate measures to defend UK national security and economic resilience. 

The lack of predictability and clear guidance is hampering UK businesses' ability to make commercial decisions about the Chinese market. 

Rt Hon Liam Byrne MP, Chair of the BIST Committee, said:  

"Britain's businesses cannot plan for the future when the Government keeps making up its China policy as it goes along. 

Ministers promised clarity and consistency. Instead, we have opportunities missed, risks unmanaged and decisions left until the eleventh hour. Britain must shape its own relationship with China, or risk having that relationship shaped for us in Washington or Beijing.

Our report sets out clear new rules of the game: protect what Britain must control, manage the risks we can mitigate and back British firms where trade can grow. Those rules must have bite. Fair competition requires action against unfair subsidies. Economic security requires stronger supply chains. Human dignity requires a ban on goods made with forced labour. 

We should welcome trade that builds Britain's strength. We should stop the trade that puts that strength at risk. That is how we turn engagement into growth, and growth into lasting security.

The Committee says the UK administration must now pursue a new framework for risk-managed growth:  

1. Identify the strategic capabilities the UK must retain as sovereign and designate this red zone off limits to Chinese trade and investment. 
2. Demarcate more clearly which forms of economic engagement with China can be permitted subject to certain risk mitigations, and which should be fully permitted. 
3. In green zone' sectors where trade should be encouraged, Government should provide targeted support for businesses especially small business by negotiating better market access, increasing export finance, and enhancing guidance. 
4. A bold new strategy for long-term UK influence in China is required where economic and security risks are lower with a plan to expand UK soft power
5. Establish a new cross-government coherent framework for taking economic and security decisions that combines threat assessments and cost-benefit analyses.  

To back this new framework, ministers should develop three new rules of the game' to govern trade with China:  

1. Insist on fair trade, strengthen trade remedies, prepare tariffs and reform procurement to enable British firms to compete on a level playing field. 

• The report calls for a fundamental rethink of the economic security toolkit and preparation of a tariff regime to be deployed if China refuses to rebalance its economy, continues to subsidise its industry unfairly, or fails to offer fully reciprocal market access; and to extend national security procurement guidance to a wider range of strategic sectors, based on the capabilities the UK needs to protect, retain or develop 

2. Prevent the transfer of sensitive technologies and data to China. 

• The Committee recommends transforming the resourcing of the Research Collaboration Advice Team (RCAT) to give universities faster advice on national security risks in international research; agree a plan with UK telecommunications firms to monitor and regulate data traffic between connected vehicles in the UK and foreign entities to safeguard against data exfiltration; and ban connected technology devices and components from critical national infrastructure.

3. Minimise the UK economy's risk exposure to coercion by securing supply chains and banning imports made using forced labour. 

• The Committee calls for a long-term plan to strengthen critical supply chains, prepare anti-coercion measures and build public support for deploying them, and accelerate preparations for disruption from a future Taiwan Strait crisis. 
• Finally, ministers accelerate mandatory human rights due diligence legislation and deliver an import ban on goods produced using forced labour in the Immigration and Asylum Bill 
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Implementing this framework will require the Government to take a new approach to policymaking on China with stronger central direction, ministerial accountability, and cross-Whitehall co-ordination