Alok Sharma has suggested that Chinese investment in Britain’s nuclear energy sector could be reviewed amid growing calls from senior Tories for a major reset in relations with Beijing.
With Boris Johnson facing calls to scale back China’s role in critical national infrastructure and industries, the Business Secretary said the Government would be “looking at all of this in the round.”
While Mr Sharma said he did not want to single out individual countries, he added that “all investments that are made in the UK” would be judged against criteria set out in existing legislation and a national security bill currently before Parliament.
It comes as a group of Conservative MPs campaigning against Huawei’s involvement in the UK’s new 5G network signalled they would now push for greater scrutiny of Chinese investments in other sectors.
Their attention is currently focussed on the nuclear sector in which the China General Nuclear Group, a state-owned energy company, is investing heavily in the Hinkley Point C plant under construction in Somerset.
Other Chinese firms have also acquired stakes in part of the National Grid and Thames Water, with China set to invest £105bn in British infrastructure by 2025.
Influential backbench MPs believe that the Prime Minister must now use a major Government review of foreign policy, defence and national security, due in the Autumn, to reevaluate the country’s role in the UK.
They include Tobias Ellwood, the chairman of the Commons defence committee, who told The Daily Telegraph: "We need to bring forward the review, recognise the changing threat picture, not least with the power shift from West to East and the growing aggression from China, and think about what our defence posture should actually be.
"Beyond the security implications, a lot of people are quite rightly asking is this a country we want to do business with."
The concerns of Tory MPs also appear to be shared by the public, with a YouGov poll published on Tuesday finding 52 per cent of Britons would back removing Huawei from the 5G network, even if risked damaging trade ties with China.
Just 16 per cent of those surveyed said they would prioritise good trade with China and keeping Huawei in the network.
Appearing before the defence committee on Tuesday, General Sir Nick Carter, Chief of the Defence Staff, told MPs that there was a “need for a strategic response” to address the rise of China.
Asked whether the UK needed to learn more about Beijing’s ambitions and whether it needed to “insulate” itself more, he added: “It seems to me that it’s going to have to be a strategic response which is going to have to institute all the instruments of statecraft, whether it’s ideology, diplomacy, finance, trade policy and of course military power."
He continued: “At the moment I think it is premature to describe it [China] as a threat, it is a challenge and I think we should recognise that as we adopt our strategic approach.”
However, Mr Johnson faces the difficult task of balancing security concerns and the economic consequences that could result from damaging the UK’s ties with China, one of its biggest trading partners.
Government insiders also pointed out that the National Security and Investment Bill, expected after the summer recess, would address many of the concerns raised by MPs.
The legislation, which has been pushed back due to ongoing concerns over Huawei, contains new provisions on foreign takeovers which pose a risk to national security.
This includes requiring British companies to report any bids that give rise to security implications, with directors who ignore the conditions facing criminal sanctions.
It also extends to academic partnerships and research projects, in a bid to curb the influence of China in Britain’s universities.
Highlighting the Government’s conundrum on Tuesday, the former chancellor Philip Hammond said he was alarmed at the “outbreak of anti-Chinese sentiment” within the Conservative Party, adding that now was “not a time to weaken our trade links with the world’s second largest economy.”
“Right now, the UK is in the process of loosening its ties with trade partners in Europe in the name of expanding its global reach,” he told the bBC’s Radio 4 Today programme.
"We have to find a way, and I think we have done it in the past with many countries, of continuing to trade, continuing to invest and welcome investment from countries with which we have frank disagreements about political issues."
Asked about Mr Sharma’s comments, the Prime Minister’s spokesman said: “In terms of the involvement in critical national infrastructure, we already have significant safeguards which are in place. That will remain the case.”
Pressed on whether Chinese investment was welcome across the economy, he added that the UK had a “hard-won reputation as one of the most open economies in the world.”