After a dramatic weekend with ministers passing legislation to wrest control of British Steel from its Chinese owners, Labour’s China policy is under the spotlight.
Sir Keir Starmer’s government came in, promising a “strategic and long term” relationship with Beijing, after years of “inconsistency” under the Conservatives.
David Lammy went on the first trip by a foreign secretary in six years. Sir Keir met Xi Jinping in the margins of the G20 in November and floated a UK-China visit.
Rachel Reeves went to the Chinese capital in January, saying her trip had secured £600m of growth for the UK economy.
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Business Secretary Jonathan Reynolds appeared to turn the tables this weekend, suggesting Chinese parent company Jingye had neglected or even sabotaged British Steel after buying it five years ago. He told Sky News he would not personally “bring a Chinese company into our steel sector”.
He changed his tune on Tuesday, while visiting Scunthorpe to oversee the delivery of a shipment of materials, saying the row was just with one company.
It’s now emerged he is expected to travel to China later this year, to restart a joint economic and trade commission which has been on ice since 2018.
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But this is no return to the golden age of some years back.
Tensions in government over China may well emerge in the coming months – as the Treasury’s drive for investment and growth jars with concerns over security.
Ministers are discussing whether parts of the Chinese state should be designated a national security threat, under new rules on foreign influence, due to come in this summer.
Russia and Iran will be covered by the enhanced tier of the foreign influence registration scheme – but ministers are yet to say anything about China.
Applying it even in a limited way would be controversial with large companies and within government – seen as a barrier to doing business.
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The Treasury’s view is that engagement with the world’s second largest economy is essential to economic growth.
Ed Miliband’s energy department is pursuing big clean energy projects, many of them backed by Chinese investment.
Wholly state-owned companies already own stakes in Heathrow Airport and Thames Water.
While Huawei was dramatically banned from the UK’s 5G network back in 2020, Chinese companies fund nuclear power, and the National Grid network.
Senior Conservatives, some sanctioned by the Chinese government, have been vocal about what they see as national security risks from this approach.
A report by parliament’s Intelligence and Security Committee in 2023 said China had penetrated “every sector” of the UK economy. It warned that “Chinese money was readily accepted by HM Government with few questions asked”.
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Some Labour MPs view this with growing concern. One senior MP, speaking privately, said: “The problem is it costs billions of pounds to build reservoirs and nuclear reactors, and we’re not raising that from taxes, so China is where we get that investment.
“There are significant concerns in the party – whether it’s about the security of critical sectors, espionage, or concerns about the use of slave labour in their products.”
Liam Byrne, the Labour chair of the business and trade committee, said there needed to be clearer ground rules on Chinese investment.
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“If we want to stay ahead of our adversaries, we’ve got to make sure that we’re not handing the most advanced technology to our adversaries,” he said.
“We need a clear definition of economic security from the government, we need a clear threat assessment, and we need a clear way in which business and government are going to work hand in hand to keep our country safe in what are now very different and more dangerous times.”
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After a rebuke from the Chinese embassy, which defended the actions of Jingye, the government insists nothing has changed in the relationship.
China is now embroiled in a trade war with the US, and the global trade rules are changing.
The tension emerging is whether economic growth overrides security concerns.
