Implementing the UK’s ‘China audit’

Executive Summary

The UK Labour Party’s 2024 election manifesto promised that, if elected, the new government would seek to “improve the UK’s capability to understand and respond to the challenges and opportunities China poses through an audit of our bilateral relationship”. 

The need for a comprehensive re-evaluation of the UK’s relationship with the People’s Republic of China (PRC) comes after a decade of dramatic change. Under successive Conservative governments, the UK’s relationship with the PRC veered from the optimism of a ‘Golden Era’ to deep-seated concerns about increasing authoritarianism of the Chinese Communist Party (CCP) at home and greater assertiveness abroad. This period of flux was marked by numerous policy u-turns and backbench rebellions, on issues as diverse as Huawei’s involvement in the UK’s 5G infrastructure to forced labour in the Xinjiang Uyghur Autonomous Region. The new government hopes that a clear-eyed assessment of the risks and opportunities presented by the rise of the PRC can help avoid the previous government’s mistakes and underpin a more coherent approach.  

The audit presents a unique opportunity to lay the groundwork for a clearer and more effective whole-of-government approach to the PRC. This paper makes the case for an audit which is focused on the risks that the PRC poses to the UK’s economic security. While the PRC has already been described by previous governments as the “greatest state-based threat” to the UK’s economic security, insufficient action has been taken to understand these risks. Chinese state-linked legacy investments continue to hold significant stakes in the UK’s critical infrastructure, while the increasing integration of Chinese technology into energy and transport networks raises new risks around dependency, supply chain resilience and cybersecurity. In contrast, a narrow focus of the audit on the UK government’s internal ‘China capabilities’, while valuable, would be a major missed opportunity and would add little to existing government reviews. 

In order to maximise its impact, the audit cannot be confined to the internal structures of the Foreign, Commonwealth and Development Office (FCDO). The main value of the audit lies in evaluating a series of risks that cut across the responsibilities of any single department, particularly for government departments which may have previously invested less resources into assessing their China risks. For this reason this paper recommends that the audit be conducted by a temporary joint policy unit sitting within the Cabinet Office, reporting to the Foreign Secretary. This unit should include representatives on loan from the Ministry of Defence, Department for Business and Trade, Home Office and other relevant departments who can act as the key point of contact for implementing the audit across their departments. The audit must also recognise that much of the UK’s China expertise lies outside of government, and should engage the views of experts and civil society groups, including diaspora groups, through a series of private roundtable discussions and consultations. 

While many aspects of the audit should remain out of the public eye, it is incumbent upon the government to publish the key findings for accountability. The UK’s lack of a publicly available China strategy document, and the limited circulation of a classified version within the civil service, has been the subject of much scrutiny. This paper argues that the expense of resources on an audit is best justified if it can feed into a revised China strategy document. Having a public version of this document is necessary to ensure wide dissemination across all levels of government, enabling a unified approach, as well as communicating the government’s vision to parliament and the broader public.

This paper sets out a proposal for defining and implementing the audit. This paper begins by discussing the urgent questions that the audit should address within the broad framework of economic security. The second part of this paper considers how the audit can be most effectively implemented across government, before concluding by considering how the results of the audit can feed into a broader China strategy.