Ministers should ‘urgently’ bring forward rules to screen Chinese investment in UK, a report warns.
Former UK diplomat Charles Parton said despite promises from the Government to take a tougher approach, rules aimed at protecting national security had failed to materialise.
In a report for the new China Research Group of Tory MPs, he warned the approach to foreign investment ‘needs reworking’.
Chinese president Xi Jinping (centre) at a communist party central committee meeting last week. China is aiming to dominate fields such as artificial intelligence and microchips
There is growing concern about China’s stated aim to dominate fields such as artificial intelligence and microchips, with Beijing-linked hackers accused of stealing sensitive technology designs from Western countries and putting them to military uses.
Parton said: ‘Chinese investment is increasingly focused on companies which can make good its technological shortcomings.
‘As new technologies increasingly can be used for both benign and military or repression purposes, we need to ensure that investment does not harm our long-term security.’
Parton, one of the UK’s top China watchers, said the Department for Business, Energy and Industrial Strategy had promised legislation to tighten up rules governing foreign investment by this summer but had missed this deadline.
He added: ‘This deadline has passed, the urgency has not.
‘Not only should the bill be introduced as a matter of urgency, but mechanisms need to be established to ensure that investment or mergers and acquisitions do not allow the transfer of technology which conflicts with UK security, interests and values.’
Concerns about foreign investment in the UK were highlighted again earlier this year when Chinese investors made a failed bid to seize control of chip designer Imagination Technologies.
China Reform, which has links to China’s communist regime, reportedly wanted to relocate the company to China but backed off after an intervention by MPs and the Government.
Britain’s takeover rules have been criticised by critics for years, with concerns raised that countries such as China can easily swoop on distressed firms.
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