The Thinker | No. 04/2026

Whatever the root causes of the controversies surrounding Lord Mandelson’s recent security vetting and diplomatic appointment, His Majesty’s (HM) Government must not miss the broader lesson: a lack of clear strategic thinking regarding the United Kingdom’s (UK) relations with the People’s Republic of China (PRC) continues to compromise national security.

It is notable that recent public scrutiny of Lord Mandelson’s vetting – and the past PRC-related client roster of Global Counsel, the advisory firm he co-founded, which has entered administration – coincided with a tribunal ruling on the case of Imagination Technologies. Ron Black, its Chief Executive Officer (CEO), blew the whistle on an operation to transfer sensitive technology to the PRC, after HM Government had allowed a Chinese venture capital company, Canyon Bridge, backed by a state-owned company, China Reform, to buy Imagination Technologies in 2017.

This is a prime example of how the Chinese Communist Party (CCP), through its companies – both state-owned and private – sets about filling important gaps in its technology inventory. The threat is not just the acquisition of dual (military) use technologies, but also forcing British, American, and European competitors from the market, thus creating long-term and dangerous dependencies.

The controversial transfer of assets belonging to Imagination Technologies, Britain’s second largest microchip design company, was carried out under the eyes of HM Government. To help navigate the UK’s regulatory and political landscape, Canyon Bridge engaged the services of Global Counsel to reassure British stakeholders and smooth the process.

Details of the Imagination Technologies case are laid out in an excellent report and follow-up article published by UK-China Transparency, an organisation that has exposed a number of instances of CCP interference in Britain. In essence, HM Government allowed Chinese investment in Imagination Technologies on the condition that Intellectual Property (IP) and accompanying know-how remained in the UK. The United States (US) Government had already specifically withheld this technology from the PRC. It had also banned Canyon Bridge from acquiring an American technology company.

Black became worried about what he perceived to be attempts to get around the conditions set for the deal, including using British engineers to train Chinese engineers in the PRC, effectively axing their own jobs, and moving the company and its technology to the PRC. When he concluded that internal argument and resistance were not succeeding, he blew the whistle, was sacked, and launched an employment tribunal case.

When seeking to build influence in British governance, state-backed entities often leverage the legitimate channels established by international businesses and lobbying firms. High-profile advisory firms can find themselves operating at the volatile intersection of corporate advisory and geopolitical risk. The UK’s historically permissive regulatory environment has allowed foreign-backed entities to engage well-connected British consultancies in order to advocate for their interests.

Before its collapse into administration in early 2026, Global Counsel’s client roster is alleged by a British public relations expert (then also advising China Reform) to have included China Reform. Other companies included Wuxi App Tech, a company the US Government claims is a national security risk. As highlighted in Martin Thorley’s All That Glistens: Chinese Party-State Influence in Britain, the methodology by which foreign state interests exploit these legitimate corporate and lobbying channels represents a systemic vulnerability. The CCP does not always need to establish covert channels; it can simply leverage the access provided by existing channels. Any government official working on the PRC who has not read Thorley’s account is remiss.

In sum, the Imagination Technologies story represents a case study in how the CCP sets out to acquire sensitive technology. HM Government should use the case as the basis for reinforcing and drawing up measures which would prevent recurrence.

Lessons and recommendations from the Imagination Technologies acquisition

HM Government should quickly ensure that a working committee – with outside advice and involvement – covers a minimum of seven areas:

1. A clearly articulated strategy for UK-PRC relations: This must set out how to balance (realistically assessed) opportunities against threats to national and economic security. The 2025 ‘China Audit’ provided no clarity within government, business, academia, Parliament, or society. David Lammy, then Foreign Secretary, insisted that the contents must remain secret. Since very few civil servants are vetted to secret level, most policymakers remain in the dark. Without overarching guidance, unity of government purpose will continue as a mirage in the Gobi Desert.

2. Establish a centre for countering disinformation and interference: This would ideally be modelled on the lines of the Australian Counter Foreign Interference Coordinator’s office. While it may carry out some activities that are withheld from the public, its default position should be openness. Currently, the Joint State Threats Assessment Team lies buried in the bowels of the Security Service. No one outside HM Government – and few inside – are aware of its existence. It should come out from the shadows.

3. List the PRC on the ‘enhanced’ tier of the Foreign Influence Registration Scheme: Under the National Security Act (NSA), this would hinder illicit CCP attempts to acquire technology and – equally important – the CCP’s aims of exporting its technologies with a view to creating monopolies and dependencies. Linked to this, there should be an obligation for CCP members in Britain to declare this as a conflict of interest when assuming a public position (e.g., at universities, when conducting sensitive scientific research, or in politics). Anyone inclined to doubt the need for this declaration should first read the oath taken by CCP members on joining the party.

4. More rigorous monitoring and implementation of existing legislation: The NSA, National Security Investment Act (NSIA), and the Procurement Act are fine laws, but only to the extent to which they are properly implemented. For example, so far, no Chinese companies have been put on the debarment list under the Procurement Act. Yet, particularly in the field of Cellular (IoT [Internet of Things]) Modules (CIMs), the dangers of allowing Chinese connectivity through CIMs have received increasing publicity. HM Government should carry out a regular, holistic review of measures designed to protect economic and national security. Its next iteration should use the Imagination Technologies acquisition – and the ease with which foreign-backed entities utilised elite British advisory networks – as a baseline for testing the system of defence.

5. Instituting more rigorous oversight of revolving doors: In October 2025, HM Government abolished the Advisory Committee on Business Appointments, a largely toothless organisation whose purpose had been to ensure that ministers and officials were not influenced in decision-making by the prospect of being hired at lucrative salaries upon retirement. Under the new system, an Independent Adviser on Ministerial Standards will rule on jobs for former ministers, while the Civil Service Commission will do so for senior civil servants. The involvement of high-profile advisory firms in transactions like the Imagination Technologies buyout underscores exactly why strict oversight of this revolving door is needed. So too does the recent scrutiny surrounding diplomatic appointments, such as the request from 10 Downing Street that Matthew Doyle be found an ambassador’s post. Whether the new system is sufficiently strong requires regular evaluation. It may also require underpinning by legislation.

6. Legislation to curb SLAPPs should be tabled urgently: ‘Strategic Lawsuits Against Public Participation’ are an iniquitous practice whereby rich companies and individuals kill knowledge, transparency, and public interest by threatening lawsuits they know they may not win, but which their targets do not have the financial means to defend against. It is increasingly being used by the CCP and its foreign representatives in ways deleterious to national security in free and open nations, especially the UK. Additionally, beyond a Chinese context, the benefits would be broad.

7. An inquiry into the PRC’s use of science and technology as a geopolitical weapon: The CCP is clear that it is in a ‘struggle’ with free and open countries and that the main battlefield is in science and technology. Using the Imagination Technologies acquisition and the corporate mechanisms that facilitated it as case studies, an inquiry should report on necessary measures for protecting Britain’s national and economic security.

Conclusion

It would be wrong to suggest that HM Government has ignored the issues raised here. Compared to the so-called ‘golden era’ of UK-PRC relations and even to more recent times, progress has been made. But too much remains to be done. Technology moves in months, governments in years. That gap must be closed. The CCP system moves in concert; more planned and more consistent. Democracies must speed up their reaction times, but also anticipate and implement prophylactic measures against hostile actors.

Charles Parton OBE is Chief Adviser to the China Observatory at the Council on Geostrategy, and Senior Research Fellow in International Security at RUSI.

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The Thinker | No. 03/2026

With Washington’s decision to attack Iran, it has become easier for the People’s Republic of China (PRC) to present itself as a force for peace and stability on the world stage. Wang Yi, Minister of Foreign Affairs of the PRC, has positioned his country as an opponent of chaos and a champion of de-escalation. ‘Might’, he has said, ‘does not make right’.

Such talk is not just opportunism. Rather, these messages are part of a longstanding attempt to present the PRC as a moral actor and the architect of an alternative model to the United States (US)-led liberal international order.

Efforts to woo Europeans with promises of peace and economic stability began almost immediately after Donald Trump, President of the US, returned to the White House. Meanwhile, talk of sovereignty and multilateralism has long been used by Beijing to win over countries in Africa and Asia. Such concepts also underpin the Global Security Initiative of Xi Jinping, General Secretary of the Chinese Communist Party (CCP), while also promising an order that: ‘peacefully resolv[es] differences and disputes between countries through dialogue and consultation’.

Yet, this is just one face of Chinese foreign policy. The other is more threatening. Indeed, it has been argued that the PRC has multiple, competing personalities.

This other face includes Beijing’s support for its partners’ expansionist and destabilising activities. The fuelling of Russia’s full-scale invasion of Ukraine is well known, while the PRC’s decision to provide satellite and missile technology to the Iranian regime is beginning to receive greater attention.

At the same time, Beijing goes about coercing and harassing its neighbours, especially Japan and the Philippines, to name its nearest. Yet, as concerning as this regional bullying is, the ultimate litmus test for the PRC’s peaceful global narrative lies just across the Taiwan Strait. Far from pursuing dialogue and consultation, Beijing continues to threaten and practise for its own war of conquest against Taiwan.

If followed through, a Chinese invasion or blockade of Taiwan would have catastrophic consequences for the rest of the world. Recent events in the Strait of Hormuz have already given a foretaste of what happens when global shipping is disrupted. Imagine this on a larger scale. Bloomberg estimates that a conflict over Taiwan could cost the global economy US$10 trillion (£7.9 trillion).

Such severe worldwide consequences ought to make Beijing’s claim that Taiwan is an internal affair redundant, even if this mantra had legs to stand on (which it does not – the PRC has never ruled Taiwan, and the legal basis for its sovereignty claims are contested). However, this will not stop Beijing from arguing this point ahead of or during a crisis. Indeed, at last year’s Munich Security Conference, Wang Yi perversely stated that ‘respect for all countries’ sovereignty and territorial integrity should mean support for China’s complete reunification’.

Is it not now time that this two-facedness is challenged? Rather than simply calling out its hypocrisy, the PRC should be urged to practise what it preaches. Britain and its partners, chiefly the Group of Seven (G7) nations, should call on Beijing to promise not to use force against Taiwan.

Currently, the PRC is repeatedly able to refuse to rule out the use of force, as if this was normal or internationally acceptable behaviour (its additional line that peaceful unification remains its preferred method provides little consolation). Meanwhile, the G7 simply calls ‘for a peaceful resolution of cross-Strait issues’, without attempting to hold Beijing accountable as the primary source of military tension, nor demanding a concrete commitment to non-aggression.

Such a demand could be developed into a more serious proposal that takes into account the PRC’s red lines – that is, committing to peace on the condition that Taiwan does not declare independence (essentially the PRC’s own 2005 Anti-Secession Law, barring the deliberately vague provision that non-peaceful means could be used if the ‘possibilities for a peaceful reunification should be completely exhausted’).

Of course, it is not strictly necessary to get into these details. The expectation here would not be that Beijing would agree to such a commitment. The PRC is unlikely to move closer to renouncing what it believes to be its sovereign right. Even Jiang Zemin’s declaration in his 1995 ‘Eight Points’ that ‘Chinese should not fight Chinese’ was swiftly followed by: ‘We do not promise not to use force.’ After all, deterring Taiwan independence depends on the barrels of many guns. In fact, given trends in Taiwanese public opinion on identity and independence versus unification, Beijing cannot achieve ‘reunification’ without force or the threat of it.

This raises a separate point about the futility of sincerely seeking a peace pledge. Even if Beijing made such a promise, much like the Seventeen Point Agreement of 1951 and the Sino-British Joint Declaration of 1984, in which Tibet and Hong Kong respectively were promised autonomy, the PRC would not honour it.

The point of pushing Beijing to rule out the use of force against Taiwan is to expose the gap between its rhetoric, which presents itself as a promoter of stability, and reality; that the regime is readying itself for war. In refusing to commit to pursuing only peaceful means, Chinese leaders will make clearer to the world their willingness to tank the global economy so they can seize and occupy territory.

Greater clarity on this point will diminish Beijing’s ability to capitalise on the current crisis for free and open nations, and diminish the appeal of its alternative model for global governance. It may also encourage others in the international community, currently sanguine about Chinese intentions, to take a more active role in restraining the PRC, while at the same time pre-emptively confronting Beijing’s attempt to shift the onus for further escalation across the Strait off their own shoulders.

Gray Sergeant is Research Fellow in Indo-Pacific Geopolitics at the Council on Geostrategy.

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The Thinker | No. 02/2026

Sir Keir Starmer, Prime Minister, has arrived in Beijing for the first visit by a British prime minister to the People’s Republic of China (PRC) in over seven years. He is accompanied by Rachel Reeves, Chancellor of the Exchequer, Peter Kyle, Secretary of State for Business and Trade, and a delegation of 60 business leaders.

The Prime Minister will almost certainly meet Xi Jinping, General Secretary of the Chinese Communist Party (CCP), and Li Qiang, Premier of the State Council. He may also meet Zhao Leji, Chairman of the Standing Committee of the National People’s Congress (Mark Carney, Prime Minister of Canada, met all three on his recent visit). Reeves and Kyle will meet with their CCP counterparts.

Should the Prime Minister even be in the PRC?

The answer is yes. Ministers should visit the PRC often. Opportunities to increase knowledge and understanding by personal experience are never wasted. Face to face meetings are a rare chance to communicate British positions directly to Chinese leaders without their going through interpretation by officials.

Although the CCP is adept at arranging ‘Potemkin’ visits, with form deliberately intended to dazzle reality, a perceptive politician should be able to see more deeply. In this author’s experience as adviser to the House of Commons Foreign Affairs Committee, that committee – neutral beforehand – returned from its visit to Beijing convinced, based on the evidence it found, that the CCP’s activities posed a threat to the United Kingdom’s (UK) interests.

What are the aims and possible achievements of the visit?

His Majesty’s (HM) Government likes to frame its PRC relations under the heading of the ‘Three Cs’ (Cooperate, Compete, Challenge). Divining the substance behind the slogan is difficult. If indeed HM Government has a connected strategy for the UK’s relations with the PRC, ‘most of the detail is not disclosable’, as David Lammy, then Foreign Secretary, told Parliament in June 2025.

HM Government is looking to the PRC to boost Britain’s economic growth and prosperity; an aim repeated to the author by several civil servants and reflected in the composition of the party accompanying the Prime Minister. Trade and investment are laudable aims to pursue, although ministers should cease speaking about trade and should rather emphasise exports (if the UK exported nothing to the PRC, it would still be Britain’s seventh biggest trade partner).

Ministers exaggerate exports to the PRC. They should exclude precious metals, which are traded in London but add little to economic growth, as well as Hong Kong, given its separate ‘One Country, Two Systems’ status (although some exports will be transhipped to the PRC as well as elsewhere in Asia). With those exclusions, the latest figures (to the end of June 2025) have British annual exports to the PRC of goods and services at £30.5 billion (around 3.3% of total exports), putting it in sixth place.

While ministerial visits should seek to promote exports, in practice, political impetus has limited effect on exports. Poor political relations have not historically held back countries’ exports. In the UK’s case, although diplomatic relations entered the doghouse when David Cameron, then prime minister, met the Dalai Lama in 2012, exports continued to rise. During the period of no ministerial visits under the Conservative government, exports hit a record in 2022 and remained high in 2023. Similarly, good relations had little effect; exports in 2016 and 2017 were below the total of 2015, when Cameron announced a ‘golden era’ in UK-PRC relations.

Moreover, Britain and other countries’ exports to the PRC have been falling in recent years. This is hardly surprising, given the CCP’s policies of self-reliance, ‘dual circulation’, and ‘Made in China 2025’, reinforced at October’s Party Plenum. The aim of the upcoming 15th ‘Five-Year Plan’ is to ensure that the PRC continues to increase the consumption of domestic goods in order to avoid dependencies on free and open countries whom the CCP regards as hostile. The same also applies to services, where Chinese intentions mirror their model used in manufacturing industries: cooperate, copy and kick out. At times, it is tempting to recall the words of the Qianlong Emperor to the first high-level British delegation to Beijing led by Lord Macartney in 1793:

Our Celestial Empire possesses all things in prolific abundance and lacks no product within its borders. There is therefore no need to import the manufactures of outside barbarians in exchange for our own produce.

Trade relations have improved since then. Ministers can open doors to accompanying business executives. The re-establishment of business and economic dialogues can create opportunities. But some scepticism is warranted when said ministers return home announcing a raft of deals. Those are the result of long months and years of hard work by businesses; and many ‘deals’ are memoranda of understanding which may evaporate before contracts are signed.

If the export position is not rosy, Chinese investment could be described as thorny. The Office of National Statistics (ONS) lists Chinese net investment in the UK at the end of 2023 as 0.2% of the stock total foreign direct investment. This may be an understatement, given that Chinese money may enter Britain from funds domiciled in other countries, but even if the figure is ten times higher at 2%, it is not substantial.

Increasingly, governments have recognised the dangers of allowing the PRC access to their nation’s technology via Chinese investment. This situation presents a complex dilemma for HM Government, which is reportedly evaluating the prospect of investment involving wind energy company Mingyang and Chinese Electric Vehicle (EV) manufacturers.

HM Government eventually ruled out Chinese participation in new nuclear plants on security grounds. In light of that precedent, it appears highly inconsistent to grant Mingyang a significant role in another sector of the UK’s critical national infrastructure. Such a move risks creating what many observers describe as a significant strategic dependency. Previous challenges involving rare earths and Covid-19 equipment have demonstrated the potential for the CCP to utilise economic leverage in ways that conflict with British national interests.

Moreover, the potential ability to turn off the UK’s energy supply should not be put in the hands of a country, which HM Government knows – although does not always acknowledge – is a threat. Turbines, inverters and other grid connecting equipment contain cellular ‘Internet of Things’ (IoT) modules and other connectivity devices. These require firmware updates, and the dangers of malware insertion at a time of high tension or even hostilities would be hard, if not impossible, to mitigate.

Allowing increased investment in Britain’s automobile industry by companies headquartered in an adversarial state adds a geopolitical dimension not present in other countries’ investment in the UK. Under the National Intelligence Law, Chinese companies are obligated to ‘support, assist and cooperate with’ the CCP, and the party does not hesitate to use its leverage.

Furthermore, Britain exports around 15% of its cars to the United States (US). The American ‘connected vehicle rule’ has banned Chinese software from imported cars after 2026 and hardware after 2029. Are ministers happy to forgo the American market and probably incur the wrath and tariffs of Donald Trump, President of the US, on other exports?

What else might be gained from the visit?

While it is right to pursue exports and investment, even if results may fall short of hopes, Sir Keir would like ‘consistent, durable, respectful’ relations with the PRC. The restoration of high-level visits and dialogues is doubtless encompassed by those adjectives. There is much to discuss and encourage, not least climate change, global health, cultural exchanges, tourism and more.

More difficult matters, particularly relating to human rights; Hong Kong; the treatment of Jimmy Lai, imprisoned business leader and British citizen; freedom of navigation in the South China Sea; and Taiwan also ought to be on the agenda. Xi will give little ear and no ground. Some minor concession to foster goodwill is possible though, perhaps the dropping of sanctions against current Members of Parliament.

The release of Jimmy Lai accords neither with Xi’s belief that the UK has no right to interfere in Hong Kong, nor with the fiction that under the principle of ‘One Country, Two Systems’ the Hong Kong legal system preserves a high degree of autonomy. Nevertheless, a robust attempt to increase CCP understanding of what Britain stands for, and what are British red lines, is worth making. It would be worth stressing that the PRC’s current exporting of its industrial overcapacity is not sustainable for either country, and that, if continued, the UK will have to take defensive measures.

What are the PRC’s likely objectives for the visit?

For the PRC, the importance of Britain ranks behind that of the US, the European Union (EU), Russia, India, and peripheral countries and nations in Africa. The CCP wants to maintain easy access to British markets; to keep the UK as a supporter of open trade and investment under the World Trade Organisation (WTO) system; to learn from, copy and ultimately replace its financial expertise; to continue to benefit from its educational excellence, scientific research and innovation; and to split Britain from America. In line with its adherence to ‘divide and rule’, the CCP quietly welcomes distance between the UK and the EU.

Conclusion: The leopard has not changed its spots

In Davos, Carney spoke of reordering global governance. It is unclear how close an alignment with the PRC that betokens. But if the US administration has changed, the CCP has not. Its global aims, ambitions, systems, ideology and values remain as before – that is, largely inimical to those of free and open nations. Perhaps the most important thing that Sir Keir can bring back from his visit is a clear understanding of the last of his ‘three Cs’: Challenge.

Charles Parton OBE is Chief Adviser to the China Observatory at the Council on Geostrategy.

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The Thinker | No. 01/2026

On 20th January, His Majesty’s (HM) Government is due to reveal whether it will permit the People’s Republic of China (PRC) to build a new embassy on the site of the old Royal Mint. The deadline for the decision has been postponed three times. The issue has ignited heated – and at times emotional – debate.

This is understandable but, in countering the undeniable threat which the Chinese Communist Party (CCP) poses to the United Kingdom (UK) and like-minded free and open nations, it is important to focus on the areas of real threat and not be distracted by an issue where the arguments for blocking Chinese intentions are not as strong as some portray.

The case against a new embassy on the Royal Mint site

Over the last year, press reports – and in particular a recent media ‘scoop’ and campaign – have highlighted the following issues:

• Sensitive communications cables run within one metre of the perimeter. The security services ‘may not have been party to all the information, and ‘even the Secret Intelligence Service [SIS/MI6] appears to have blinked, reportedly conceding that a colossal spy base is the lesser of two evils.’ It is worth noting that SIS is not the agency responsible; rather that falls to the Security Service and its Centre for the Protection of National Infrastructure, and to Government Communications Headquarters (GCHQ) and its National Cyber Security Centre.

• It will be the biggest embassy in Europe, ‘a 5.5 acre [22,000 square metre] panopticon featuring more than 230 on-site flats for diplomatic personnel’, raising the question of ‘why would you need people living there overnight, unless they were up to no good?’.

• ‘Unredacted plans’ reveal 208 ‘secret underground rooms’, ‘clearly a national grade intelligence collection operation’, while a hidden chamber 40 metres long will be furnished with large extractor fans, indicating cyber attack facilities. The PRC intends to knock down an original underground wall and build a new one closer to the sensitive cables. ‘Large sections of the internal blueprints remain entirely shielded from scrutiny. When the UK Secretary of State asked for these rooms to be explained, China flatly refused.’

• ‘A huge spy bunker in the heart of London’, containing ‘an extra 200 spies in that embassy’.

• The embassy will contain ‘clandestine detention facilities’, in which Hong Kong dissidents and others perceived as enemies of the PRC may be detained.

• Embassy security measures may affect the quality of living of nearby residents. Future protests outside the site may cause disruption and public order issues for the police.

• Difficulty of access to historic sites. Access to the site of a 14th century abbey will require Chinese permission. The site is also close to the historic Tower of London, creating a blot on a much-visited national monument and tourist attraction.

‘Seeking truth from facts’ – and probabilities

The cables are around one metre from the site. The Royal Mint telephone exchange is also adjacent. The precise nature of the communications passing through is not disclosed publicly for obvious reasons. The cables themselves are part of a large web; they are by no means the only carriers of communications to and from the City of London.

Sensitive traffic will be encrypted. The security service will know the extent of protection afforded by encryption and will understand the flows of data through different parts of London, and the extent to which that allows them to control risks of spying and sabotage. However, sabotage is highly unlikely, unless relations reach a pitch of considerable hostility, and then action would be easily attributable.

If their view is that they cannot manage the risks, then HM Government’s decision is easy: no Chinese embassy on the site. The security services will certainly have reported accurately on this. For a government whose most senior ministers continually reiterate that national security is their top concern, it would be a gross dereliction of duty to ignore the recommendations of the security services. It is also foolish, given the likelihood of a leak.

The size of the embassy is not as astonishing as portrayed. Currently, the PRC has six sites in London (chancery, commercial, education, culture, consular, and science and technology sections). Bringing those together on one site requires considerable space, but probably less than the total area currently occupied by their six buildings. Britain has perhaps 200 employees in its Beijing embassy (although the author last served there in 2017, so this estimate may be out of date and on the low side). That the PRC, as a bigger power, has more in London is not surprising.

Furthermore, whereas large numbers of those in the British embassy in Beijing are locally engaged Chinese citizens, the PRC’s embassies contain no local British staff. Security, ancillary staff, cooks, handymen and more come from the PRC. Finally, because they fear the ‘hostile special forces’ in many foreign capitals and like to control their own personnel tightly, the Chinese authorities want their staff to live on site. Thus, comparisons with the size of the United States (US) embassy, whose staff rent accommodation throughout London, or with Chinese embassies in other European capitals, are not apposite. No doubt if the PRC were to consolidate its buildings in Berlin, Paris or Rome onto one site, it would require a similarly sized footprint to that of the Royal Mint.

Secret underground rooms are common to many British houses. Their owners call them ‘cellars’ or ‘basements’. Those at the Royal Mint are hardly secret: they have been there since 1810, presumably to store minted coins. ‘Unredacted plans’ sounds worrying, but plans of a building over two centuries old have presumably always been available.

It is normal for embassies to keep to themselves how they use their space. The British, Americans and others are not open with host countries about where and how they locate their communications, defence sections, intelligence officers, and sensitive functions and equipment. The insistence that the Chinese bare all on plans is unrealistic. Meanwhile, it should not come as a surprise that large computer suites and extractor fans are put in the basement: it is a big embassy, requiring commensurate facilities. These are usually kept underground where it is cooler.

The new underground wall reported to be under consideration by the PRC is likely to be defensive in purpose. It is standard practice for all nations to protect their embassy computer and communication suites from external attacks.

Talk of the embassy as a spy centre is exaggerated. While there will be Ministry of State Security (MSS) and military intelligence officers in the embassy – many countries post intelligence officers to their embassies – modern technology and surveillance capabilities militate against recruiting and running agents from an embassy. MSS officers in the embassy will be feeding back information about potential targets, but recruitment and running of agents take place most often in third countries, away from the eyes of the security services of the target’s home nation.

Recent attacks on Parliament bear this out: Christine Lee, the Cash/Berry affair and the recent Linked-In recruitment attempts have not involved the Chinese embassy. Abroad, arrested Chinese spies have also not operated from an embassy.

It makes little sense to use the embassy for transnational repression and detention facilities. As with espionage, were the PRC to kidnap dissidents – something it has not done on UK soil since 1898, when the Qing dynasty attempted to render Dr Sun Yat-sen to China – incarcerating them in the embassy would make little sense. It would become a centre of protest, unlike a safehouse well away from attention.

Embassy security may cause disruption. The site is situated on a busy and important intersection; not ideal for policing protests. Policing may require more resources than at the current embassy site. HM Government has taken the view that policing issues and the inconvenience to local residents are not sufficient reasons to ban the embassy. Whether that is a correct call will emerge if, and after, it begins operation.

Access to the historic site of the abbey has been described as ‘the most horrific part’. This seems exaggerated. Few welcome the idea of controlled access to part of Britain’s historical legacy; few will enjoy the sight of a big embassy across the street from the Tower of London. But this hardly seems sufficient reason for turning down the application.

HM Government’s approval of the embassy plans is likely to provoke a judicial review. This may hold up the building work for a year or more.

The UK’s allies have expressed concerns. However, some of their legislators and others who have spoken up will not have been fully informed. In particular, it is inconceivable that the relevant American security authorities have not been advised of measures to reroute cables or otherwise protect communications.

Buildings and sites do not spy, bully or interfere, but people do

The main issue is the security of communications. If cables can be rerouted and otherwise protected, arguments for withholding permission for the new embassy to go ahead are weak.

This does not mean that HM Government should be complacent about the threat posed by the CCP, or should not take strong measures to stop espionage, transnational repression and bullying on Britain’s streets, as well as other forms of interference. It has the power to control the number of Chinese staff – a power granted by the Vienna Convention – which also confirms the power to request that individuals are withdrawn.

This appears to have happened in the case of six Chinese officials from the Manchester consulate, who were quietly withdrawn after the embassy was called in to the Foreign, Commonwealth and Development Office (FCDO). Except in the case of flagrant espionage or serious criminal behaviour, all governments prefer not to declare someone ‘persona non grata’, but rather to make it clear that relations would be strained unless the offender is withdrawn.

HM Government has a difficult task in its relations with the PRC. It must reconcile four often contradictory factors: national security, economic prosperity, climate change objectives, and public and parliamentary opinion. Its handling of the new embassy has been less than adroit, particularly the announcement of repeated delays on a decision (it is not clear why, but it may well be because the PRC has linked its new embassy to the rebuilding of the British embassy in Beijing, and reaching agreement has been difficult).

But on this issue, the current government was not dealt an easy hand. In 2018, Boris Johnson, then Foreign Secretary, agreed to the PRC buying the Royal Mint site for conversion into a new embassy. Whether he fully consulted the relevant experts and came to a considered view before he made that decision is beyond the scope of this article.

Charles Parton OBE is Chief Adviser to the China Observatory at the Council on Geostrategy.

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The Thinker | No. 06/2025

Rumours of the imminent or actual political demise of Xi Jinping, General Secretary of the Chinese Communist Party (CCP), have been cooking these past weeks. Leadership politics in the People’s Republic of China (PRC) are always obscure, lending aid to conspiracy in its perennial battle against sober analysis.

In the gallimaufry of ‘evidence’, every rumour has been diced and thrown into the pot. Thus, Xi disappeared for two weeks in May. Omnipresent and omnicompetent, Xi almost never leaves the front pages of party media, yet references to him tailed off. Party elders have been ‘making a comeback’ or ‘out on manoeuvres’ (never mind that those cited – Hu Jintao, former General Secretary of the CCP and President of the PRC, and Wen Jiabao, former Premier of the PRC – have a combined age of 164, and the former is clearly senile). The ‘Princeling’ and ‘Shanghai’ factions are emerging from their comas. The May politburo meeting did not take place, and other economic commissions led by Xi have met only sporadically. He did not chair a recent Central Military Commission (CMC) meeting. Military leaders appointed by Xi have been removed, and ‘elements within the army’ are among those ‘moving against Xi’. A meeting with Aleksandr Lukashenko, President of Belarus, did not follow normal protocol: it was held in Xi’s house, not official buildings, and photographs were few.

This stew has been seasoned by comments from Taiwanese, dissidents, YouTube (clicks often earn more advertising money than truth) and other disaffected commentators. It smacks of comfort food: Xi has made the PRC a threat, and if he goes, things will get better. But Xi is not going soon.

Nevertheless, the stew or slew of ‘evidence’ does need explanation – or at least contradiction, since the obscurity of CCP top level politics prevents certainty. A more likely guess is that Xi underwent a medical procedure in May. It happens. He is 72 years old, and in the last nearly 13 years of power, his punishing schedule allows him only a short break by the seaside in August. Leaders, like cars, sometimes need to go into the garage for servicing.

This would explain much of the ‘evidence’, such as why there was no May politburo meeting (nor, by the way, was there one in May 2023, so it is not unprecedented), or why Xi did not chair the CMC meeting. If he was recovering from an operation, a home meeting with Lukashenko would be medically wise. Moreover, Xi’s appearances in the People’s Daily, the party’s newspaper, have been no fewer than during the same period last year.

Talk of factions and party elders is outdated. There is only one faction in the PRC: Xi’s faction. Xi has taken down both actual and potential political opponents. The elders, now out of power for over 12 years, are doddery, their networks atrophied or destroyed. Every year in August they go to the seaside resort of Beidaihe. It was no coincidence that as early as August 2015, their stay was marked by a prominent article in the People’s Daily, which emphasised the theme of ‘not reheating cold tea’; a warning to retired leaders to steer clear of politics. Or else.

Some things do require a wider explanation. Why were there so few meetings over the past year of the important policy setting bodies, the Central Comprehensively Deepening Reform Commission and the Central Financial and Economic Affairs Commission, both of which are chaired by Xi? And what is going on in the military, where many generals appointed by Xi have been taken down?

Again, we are reduced to speculation, but conspiracy is unlikely to be the answer. It may be that Xi believes that current policies, centring on investment in new technologies and the industries which they spawn, will restore economic growth. Xi has been steering clear of deep-going reforms which would rebalance towards domestic consumption as the engine of growth, since they require handing decision-making powers to private companies and individuals. That risks provoking demands for political reforms (‘no taxation without representation’), a threat to the CCP’s hold on power. If policy is not to be changed radically, why meet?

As for the People’s Liberation Army (PLA) – the PRC’s armed forces – to lose some generals may be regarded as a misfortune, but to lose so many looks like more than carelessness. However, it does not look like serious opposition, even if there must be many in the army who loathe Xi, his military reforms and his controls. If anything, it is a demonstration of the completeness of his control. Even some who, by virtue of past association, are considered his allies have been taken down. Xi has made it very clear that he will not tolerate those whose performance falls short of his wishes or who are corrupt. A recent article in the party’s ideological journal quotes Xi as emphasising that top leaders, starting with the politburo, must set an example. No one is untouchable. There is no ‘golden seal of immunity’, no ‘iron-hat prince’. That applies no less in the PLA, where buying positions and syphoning from budgets have been gargantuan.

Control of the army and the security services is essential to survival in dictatorships. Xi has put the loyalist Zhang Youxia in charge of the PLA. Zhang is an exception to retirement age limits. He must know that without Xi’s backing, he would be out. Moreover, he is surely not so foolish or reckless as to risk plotting, when he knows that the act of recruiting conspirators must leak if the coup is to be sufficiently broadly based as to have a chance of success.

In the CCP’s brutal world of claw and tooth, the idea that Xi is under house arrest or being allowed to continue while a successor is found is altogether too genteel. Xi has shown himself as ruthless as his predecessors (the ineffectual Hu Jintao excepted). Restrictions on top leaders meeting each other are tight (deliberately so) to prevent plotting. Paranoia is an essential requisite for the job, and Xi has moved fast and hard against any potential disloyalty.

The fall of a leader in the PRC is usually preceded by the arrest or taking down of close subordinates. Xi’s trusted lieutenants, particularly Cai Qi and Ding Xuexiang, remain in harness and in the news. Indeed, in the last few days, Xi himself has been restored to the front pages, and not just for his visit to Kazakhstan’s capital Astana. Leaders who fear a coup do not travel abroad.

So, barring ill health – Xi has inherited longevity genes and, like all CCP leaders, enjoys the special food and medical care reserved for top officials – he will be leading the PRC until 2032, and possibly thereafter from behind the arras. Even if he steps down from the presidency in 2027, which is possibly wise given the tiring schedule of travel it imposes, he will retain the two posts which are the true source of power in Beijing – party General Secretary, and chairman of the CMC.

That will not stop rumours. And if Xi does fall to a coup before 2032, the author will, of course, be the first to assert that he predicted it.

Charles Parton OBE is Chief Adviser to the China Observatory at the Council on Geostrategy.

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The Thinker | No. 05/2025

The journey of the Royal Navy’s Carrier Strike Group 2025 (CSG2025) – named Operation HIGHMAST – to the Indo-Pacific this year has long been known; late last month it set sail from the United Kingdom (UK). Yet, the route Operation HIGHMAST will take, once in the region, remains unconfirmed. Commodore James Blackmore, who is commanding the deployment, has said: ‘I will deliver whatever mission I am ordered to go and do…’

Following this remark, The Telegraph ran the following headline: ‘Royal Navy ready to defy China in the Taiwan Strait’. This begs the question: is it?

Professor Michael Clarke has placed bets that it is not. He has wagered a tenner that ‘some element of the task group will go through the South China Sea…but none of them will go through the Taiwan Strait’. Presumably, he thinks the current government is too frightened of upsetting Beijing.

There is some merit to this thinking. Upon taking power, the Labour government has, quietly, attempted to reset relations with the People’s Republic of China (PRC). First and foremost, this has meant more engagement. Since last summer, there has been a series of ministerial visits to the PRC, as well as a recent trip by Sir Tony Radakin, Chief of the Defence Staff. In this era, contentious issues will be raised privately while posturing in public will be kept to a minimum – and sailing a frigate through the Taiwan Strait would be a very public act.

Then again, there are several reasons to think that the Royal Navy will indeed transit the strait.

First, Britain is committed to upholding international law, including the United Nations Convention on the Law of the Seas (UNCLOS). Last year, Catherine West, Minister for the Indo-Pacific, reaffirmed this commitment and proposed to protest any action which threatened the primacy of the convention. In March, David Lammy, Foreign Secretary, even donned a red life jacket while in the South China Sea to underscore this point.

In line with UNCLOS, there exists a corridor of water running through the strait where freedom of navigation rights apply. In 2023, Grant Shapps, former Defence Secretary, clarified that ‘Freedom of navigation does cover the straits of Taiwan’. Yet, Beijing appears to deny this when it – as it frequently does – protests foreign military vessels transiting the strait. In fact, the People’s Liberation Army (PLA) – the PRC’s armed forces – also engages in reckless activities aimed at deterring other navies from taking this course. Last summer, the Ministry of Defence of the Netherlands complained about the ‘potentially unsafe’ situation created when two Chinese fighter jets tracked its frigate, HNLMS Tromp, as it transited the strait.

Beijing is also attempting to legitimise its control over the Taiwan Strait with its coast guard. In April 2023, a three-day patrol, including ‘on-site inspections’ in the central and northern parts of the strait, were announced. No boardings were recorded, but similar patrols, which involved crossings over the strait median line, have occurred. So-called ‘law enforcement patrols’ to inspect, intercept and detain ‘unwarranted vessels’ were also announced as part of the PRC’s ‘Strait Thunder-2025A’ exercises. It has been alleged that during these drills, eight Chinese Coast Guard (CCG) ships operated on the Taiwan side of the median line, with one of these vessels entering Taiwan’s 24 nautical mile contiguous zone.

If the Royal Navy transits, it will do so not simply because it can, but because Beijing's undermining of international maritime law gives it a reason to. The PRC’s increasingly bellicose actions towards Taiwan provide another…

Over the past few years, the PLA has launched large-scale military drills around Taiwan. In doing so, Beijing has sought both to intimidate Taiwan and its partners as well as practise blockading the island. Already, the new leadership in His Majesty’s (HM) Government – as adverse as it may be to megaphone diplomacy – has called out the PRC for its military escapades. Following April’s ‘Strait Thunder’ drills, the Foreign, Commonwealth and Development Office (FCDO) expressed its concern and reiterated that: ‘[HM Government] consider[s] the Taiwan issue one to be settled peacefully by people on both sides of the Taiwan Strait through constructive dialogue, without the threat or use of force or coercion.’

A transit through the Taiwan Strait would reinforce the commitment of the UK to peace and stability across the strait. As Luke Pollard, Parliamentary Under-Secretary of State for Defence, has stated, one reason for the CSG’s deployment is to make clear that ‘difficulties’, including those between Taiwan and the PRC, ‘are best resolved diplomatically’.

Failure to transit would undermine Britain’s commitment to the future of this waterway; one which HM Government prioritised only two years ago in the Integrated Review Refresh (IRR), and which one fifth of global maritime trade travels through. It would also undermine deterrence – how credible is the threat of economic sanctions in the event of a Chinese attempt to take Taiwan if the Royal Navy dare not sail through the strait?

Finally, a transit would not be a novelty, even though the media tends to treat it as an unexpectedly daring feat. British warships have done this before – most recently HMS Richmond during the CSG deployment of 2021. Since then, in addition to many American transits, an array of other countries has followed suit. A few months after the aforementioned Dutch transit, for example, two German navy vessels travelled through the waters. In February 2025, the Royal Canadian Navy transited the strait.

In fact, it seems that HM Government is keen on these multilateral efforts, perhaps even encouraging them. At the very least, before leaving his post as then de facto ambassador to Taiwan, John Dennis called for countries with the capacity to do so to sustain efforts to demonstrate freedom of navigation rights in the strait. On the Royal Navy and its record of transiting, Dennis told Nikkei Asia: ‘There is no doubt these operations will continue.’

So, it would seem that there is little need to speculate. Given this comment, Beijing’s actions and the response of Britain’s allies, the question is surely: why would the Royal Navy not transit the Taiwan Strait?

Assuming that later this year, a British warship does transit, what should the message of HM Government be? After all, as they did in 2021, the Chinese Communist Party (CCP) and its mouthpieces are bound to brand the move ‘meaningless’ and/or ‘a provocation’. A boilerplate statement reaffirming the Royal Navy’s compliance with international law is to be expected in reply. Yet, do the times we live in not call for more? Beijing’s behaviour has worsened over the past four years but, despite their increasing aggression, they continue to win global support for their position towards Taiwan.

When Lammy went to the South China Sea, his remarks were fulsome and clear. Here the Foreign Secretary did not pussyfoot about. He identified the problem as ‘dangerous and destabilising activities by China’. He explained the importance of the trade routes running through these waters for the UK’s prosperity, and he linked HM Government’s response to efforts to ‘maintain a free and open Indo-Pacific’. The same should be done for the Taiwan Strait.

Gray Sergeant is the Research Fellow in the Indo-Pacific at the Council on Geostrategy.

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The Thinker | No. 04/2025

Relations between Beijing and Moscow are now at ‘their best in history’, according to a press release issued by the Ministry of Foreign Affairs of the People’s Republic of China (PRC) last year.

This year marks the second half of the ‘China-Russia Year of Culture’ – a series of cultural exchanges taking place over two years to mark the 75th anniversary of diplomatic relations between Beijing and Moscow, which was celebrated last year. Xi Jinping, General Secretary of the Chinese Communist Party (CCP), attended the inaugural concert, which marked the first of many cultural events defining the initiative, along with Vladimir Putin, President of Russia.

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The Thinker | No. 03/2025

Only last week, JD Vance, Vice President of the United States (US), was telling Kyiv: ‘The very best security guarantee is to give Americans economic upside in the future Ukraine’. He was, of course, referring to a minerals deal.

The message was clear: if you want Washington to care about your country, give it a financial reason to do so. If this is indeed the case, as it appears to be in the transactional era of Trump, why then is Taiwan reducing America’s stake in its future?

On the very same day in which Vance made his remarks, Taiwan Semiconductor Manufacturing (TSMC) pledged a further $100 billion (£77 billion) to build factories in the US. The plan, which is in addition to the $65 billion (£50 billion) which TSMC has already committed, also includes the construction of a ‘major’ research and development centre.

Naturally, this has raised questions about the longevity of Taiwan’s so-called ‘Silicon Shield’. Could this, as one journalist asked Donald Trump, President of the US, ‘minimise the impact’ on the US if the People’s Republic of China (PRC) decided to take Taiwan? Here is what Trump had to say:

Well, it’s a very interesting point. It’s a great question, actually. But this would certainly – I can’t say ‘minimise’. That would be a catastrophic event, obviously. But it will at least give us a position where we have – in this very, very important business, we would have a very big part of it in the United States. So, it would have a big impact if something should happen with Taiwan.

If Washington is less dependent on Taiwan for semiconductors, so the argument goes, the more likely it will be to abandon Taiwan in the event of an attempted annexation. In fact, voices in the ‘Make America Great Again’ (MAGA) movement have argued for a reconsideration of the US’ commitment to Taiwan after America has built up its own domestic chip production. Fringe voices, perhaps, but for how long?

This is a problem for the future, and much will depend on how the Republicans develop. The ‘Silicon Shield’ will hold for the rest of Trump’s presidency. TSMC’s recent announcement came with no timeline and, come 2032, Taiwan is still projected to produce just under half of the world’s supply of logic chips below 10 nanometres (nm) – when it comes to chips, the smaller the better. There are also question marks over US production of the most advanced semiconductors (2nm and less). Taiwan’s presidential office has promised that this technology will not be transferred to the US.

Taipei may be playing the best game it can. Aside from allowing TSMC to avoid tariffs, a deal on chips could keep Trump sweet, as too could increasing defence spending (although Lai Ching-te, President of Taiwan, may need to spend even more to meet expectations). The short-term goal must be to avoid Trump’s ire.

Whether this will work is anyone’s guess; predicting the president’s next step would be a mug’s game. The first few weeks of Trump’s presidency contain mixed signals for Taipei.

On the one hand, Washington’s approach appears consistent. This was certainly the message Raymond Green, Director of the American Institute in Taiwan (AIT), sought to get across this week. And there is much to support this claim, including Trump’s joint statement with Shigeru Ishiba, Prime Minister of Japan, which reaffirmed opposition to force or coercion changing the cross-strait status quo. Additionally, two US Navy ships have already sailed through the Taiwan Strait since Trump took office and, at the beginning of this month, Washington was quick to refute Beijing’s distorting of UN Resolution 2758. No doubt close cooperation continues behind the scenes as well.

The US State Department’s decision to remove ‘we do not support Taiwan independence’ from its website may even be seen as a step-up in US-Taiwan relations under the current administration,although this sentiment continues to be expressed with the wording ‘we oppose any unilateral changes to the status quo from either side.’

Yet, Trump’s approach to settling the war in Ukraine is ominous. Nobody should be surprised by the president’s indifference to defending democracies. However, his willingness to pressure a victim of aggression into concessions, over the heads of allies in the region, is alarming. If the big powers can carve up bits of Eastern Europe, why not East Asia?

The Trump administration in practice does not neatly align with Trump in theory. So far this might be explained by the fact that Trump has paid very little attention to East Asia. While Marco Rubio, Secretary of State, made a meeting of the Quadrilateral Security Dialogue (Quad) his debut, on the foreign policy front, Trump has been focused on Ukraine and Gaza. As long as this is the case, we can expect US institutions to keep things ticking over.

However, what happens if Trump turns his hand to Taiwan policy? In the process of deal-making, could Trump recommit to the words ‘we do not support Taiwan independence’ or go further by stating his opposition to Taiwan independence, as Beijing would no doubt like him to? More than that, would he be prepared, as he has been elsewhere, to throw other sacred norms and commitments up in the air before he begins to bargain?

When asked about whether he would come to Taiwan’s defence, Trump’s go-to line is ‘no comment’. This is a far cry from the reassuring ‘yes’ uttered by his predecessor Joe Biden, former President of the US. Then again, with Trump, perhaps this silence is golden.

Gray Sergeant is the Research Fellow in the Indo-Pacific at the Council on Geostrategy.

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This Thinker is by George Magnus, member of the Advisory Council of the China Observatory at the Council on Geostrategy, and former chief economist at UBS.

The Thinker | No. 02/2025

Rachel Reeves, Chancellor of the Exchequer, may have had good reasons to re-start a formal economic and financial dialogue with her Chinese counterparts after an almost six-year hiatus. Dialogue, after all, is a virtue in and of itself, and can contribute to understanding, if not agreement and alignment. Yet, His Majesty’s (HM) Government’s oft-quoted mantra that better ties with Beijing will boost economic growth in the United Kingdom (UK) constitutes a poor excuse and exaggeration.

For starters, trade with the People’s Republic of China (PRC) is only about 5% of total UK trade in goods and services, and is far overshadowed by trade with the United States (US) and the European Union (EU). It is half the country’s trade with the Commonwealth. Only about 0.5% of the UK’s stock of inward and outward foreign investment involves the PRC. Moreover, Beijing’s economy is hardly in the best of health, propped up by the persistent rolling out of unsustainable borrowing by local governments. The more restrained outlook for Beijing’s economy, along with a much more repressive and controlled business environment certainly was not mentioned in HM Government’s official statement.

HM Treasury’s motivations

The Treasury claims that the outcomes of the meeting will boost the UK economy by £600 million over five years, possibly up to £1 billion, but there is little in the text that adds up to this. Even if it did, it would still fall short of even a rounding error in the UK’s £2.6 trillion economy. Writing in The Times as she left for Beijing, Reeves wrote that she was eager to promote financial services, ‘which are the engine powering prosperity and growth…and a core source of Britain’s competitive advantage on the world stage’. Britain’s financial services sector is indeed an important economic player with global status, and a key source of jobs and tax revenues at home. Yet, its contribution to Gross Value Added (GDA), or the contribution made to total output, is a bit smaller than manufacturing and on a par with a few other sectors, none of which rely on pitching to Beijing.

On the 16th January, HM Government announced that Sir Keir Starmer, Prime Minister, secured £600 million in investment from Polish companies over the next four years. It is interesting to note that he secured an identical amount to Reeves, without feeling the need to preface it in a desperately eulogistic justification in a leading national publication. It is also worth pointing out that the £600 million secured in Warsaw occurred on the sidelines of a more significant bilateral event – the signing of a new defence and security treaty.

It is possible that the Treasury and British banks see closer relations with Beijing as a way to offset several problems that have ruffled the financial services sector. Major firms have been delisting or transferring their primary listings from London – 88 in 2024 – with many going to the US. The number of initial public offerings, or share issues when firms go public, on the London Stock Exchange has fallen for several years. Financial transactions denominated in euros continue to migrate to countries within the eurozone. The stock market itself has been a relatively weak performer, with UK pension funds investing less than 5% of their assets at home.

Details of the deal

The terms of the dialogue agreement are revealed in the 69 paragraphs of the Treasury’s 2025 UK-China Economic and Financial Dialogue policy outcomes.

Both sides agreed to regular dialogue on financial supervision and data sharing. This is standard fayre, but the latter is not something that foreign firms feel optimistic about in today’s People’s Republic of China, bearing in mind the national security status of data and the clampdown on data transfer, usage and publication.

Feasibility studies are proposed which might establish closer capital market links and allow UK firms better access to the asset management, insurance and pension markets in the PRC, and to bolster the hitherto lacklustre initiatives since 2019 to increase mutual stock exchange listings and equity investment transactions in different time zones. Shein, the Chinese online fast-fashion firm, submitted plans for a London listing in 2024, after being turned down in the US, sparking hopes in the City that others might follow. The company has run into problems including in the UK over allegations of the use of forced labour in its cotton supply from Xinjiang Province. A Financial Conduct Authority (FCA) decision is awaited.

Even though the PRC welcomes the know-how that foreign financial firms bring, the reality is that over the years, including when business and political conditions were far more propitious, foreign financial firms have never really managed to build market share or make their presence felt against local competitors.

The UK sought from Beijing better market access for a small number of products in the agri-food sector (pork, pet-food and poultry), and asked that consideration be given to the healthcare and auto sectors. It also requested co-operation for improved access for law, architecture and accounting firms, and a level playing field in things like government procurement, state enterprise reform, competition standards, and intellectual property. There may be some minor business possibilities here, but market access is a familiar shortcoming that the UK, US and other countries have long campaigned for the PRC to address. Beijing’s idea of a level playing field is one where local firms prevail, and dominate market share.

For its part, Beijing offered to consider licensing and quota allocations for UK financial firms to do more business in. For example, the PRC’s bond, derivatives, and wealth management markets. While individual UK firms may conceivably benefit, this is most unlikely to apply generally. The UK agreed to the PRC being the first to issue a first sovereign renminbi green bond in London, while other renminbi-related financing opportunities would also be opened up.

Future implications

If this all sounds rather esoteric and calculated to benefit the financial firms that accompanied Reeves to Beijing, it is because that is precisely the case. Yet, the speed with which HM Government has changed course in its dealings with the PRC, reportedly also having expressed support for Beijing’s plans for a new London ‘mega embassy’ after usurping the decision from the local council, suggest it has already decided to ‘engage’ full-on with Beijing, ahead of the return of Donald Trump, President of the US, and without waiting for its own policy review on the PRC, the so-called ‘China audit’.

Time, and events, will tell if future dialogue, which is desirable to have, will open the door to a more convincing growth narrative that is beneficial to the UK. For the moment, though, financial interests and political calculus are running this show.

George Magnus is a member of the Advisory Council of the China Observatory at the Council on Geostrategy.

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This is the first of a new format of opinion pieces on Observing China which will analyse the domestic and foreign policies of the People’s Republic of China (PRC). This first Thinker is by Grace Theodoulou, Policy Fellow at China Observatory at the Council on Geostrategy.

The Thinker | No. 01/2025

Our Celestial Empire possesses all things in prolific abundance and lacks no product within its borders. There is therefore no need to import the manufactures of outside barbarians in exchange for our own produce.

So read the blunt message to King George III of the United Kingdom (UK) sent by emperor Qianlong following Britain’s first diplomatic mission to China in 1793. The 100-member delegation of the so-called ‘Macartney Embassy’, was led by the statesman George Macartney, the first British envoy to China. Due to a long-standing trade imbalance between Britain and China, largely driven by British demand for Chinese tea, porcelain and silk, King George III sent an envoy to Beijing with four main requests. These included access to new trade ports and a permanent embassy in Beijing.

Emperor Qianlong famously rejected all of these requests. It is often thought that the mission failed because George Macartney refused to kowtow nine times before the emperor as was required for visitors to the imperial court. Instead, he compromised with one kowtow and a western genuflexion.

But historians, both from the People’s Republic of China (PRC) and abroad, have since surmised that a general incompatibility in world views was to blame. Macartney refused to acknowledge that the emperor, as ‘the Son of Heaven’ with no equal, was superior to King George III, hence why he declined to prostrate himself repeatedly.

Macartney believed that his country, a burgeoning imperial power, was the most important in the world and not the ‘middle kingdom’ (also the translation of the Mandarin name for ‘China’) at the centre of the Earth. Because Macartney did not subscribe to these two core beliefs, upheld by the Chinese imperial court for millennia, he was sent home empty-handed.

This begs the question: did the trip of Rachel Reeves, Chancellor of the Exchequer, to the PRC last week amount to a full ‘kowtow’, as some Whitehall officials have said?

She did not help the UK negotiating hand by ploddingly repeating that to not engage with the PRC is ‘no choice at all’. In her op-ed to The Times, Reeves belaboured the fact that the PRC is the world’s second-largest economy. Perhaps through flattery, she hoped employing a different tactic to her predecessor 232 years ago might yield better results. But did this succeed? Or did it reek of need?

In defending her trip during a financial bond crisis at home, she dangled the phrase ‘second-largest economy’ in front of readers multiple times. But if the PRC is such a tantalisingly lucrative option, why did she walk away with a deal that at best, will amount to 0.007% of Britain’s £2.5 trillion economy?

Reeves secured a paltry £600 million of investment from the PRC (a £14.6 trillion economy) over the next five years. Compare this to the £18 billion investment the UK secured in 2023 from Japan (a £3.4 trillion economy). Or the £4 billion investment from Malaysia announced on the 15th January.

Reeves is also at pains to disassociate the Labour government from its Conservative predecessor’s handling of the relationship with Beijing and, according to her and other Labour politicians, its perceived failings.

This want to be different is harmful. When dealing with an authoritarian regime such as the Chinese Communist Party (CCP), Britain should present a united front. The Chinese government certainly can – there has not been another political party in power since 1949.

Having successive governments within a democracy is a strength. It allows for economic and social growth and political accountability. Agents of the United Front Work Department (UFWD) can find ways to exploit Labour’s dire need to appear different to their predecessors. His Majesty’s (HM) Government should not allow its democratic nature to become a weakness. Like the Chinese, the British government should present a (non-pernicious) ‘united front’.

The criticism served lavishly by Lammy, Reeves and Starmer on the Conservative government appears to be more than simply part of the game of politics. Reeves seems genuinely to believe that the previous leadership should have been more ‘consistent’ in its diplomacy with Beijing.

Was the previous government not correct to change its tune when Xi became more aggressive both domestically (in Xinjiang, Hong Kong and Tibet) and internationally (in the South China Sea and Taiwan)? Or when the UK saw a marked increase in cyberattacks from the PRC? Will Labour change its tune if Beijing displays even more hostility than it already has?

It is also worth noting the hypocrisy of Reeves’ claim that ‘the previous government failed to realise the value of engagement with China’. Recall that the so-called ‘Golden Era’ of UK-PRC relations happened under the previous Conservative government, which Labour rightly criticised for too much engagement with Beijing. Reeves cannot prioritise party politics over establishing a prudent and transparent strategy for engagement with the PRC.

David Cameron and George Osborne spearheaded the ‘Golden Era’ of bilateral relations because the PRC emerged relatively unscathed from the 2007-2009 financial crisis, and they believed it offered the UK something of a lifeline. But they failed to recognise that the PRC’s economic growth was unsustainable, and Xi’s ever-asphyxiating grip over the country.

Now that Britain and its allies have seen the CCP’s record aggression since Xi took office in 2012, and the General Secretary has laid out his ‘red lines’ in diplomatic relations with foreign nations, leaders in the free and open countries cannot claim to be in the dark about just how uncompromising Xi is willing to be.

Reeves, much like Macartney, returned from Beijing to ridicule and accusations at home of having presented the UK as weak and supplicating. Both faced a similar predicament in soliciting a better trade deal from a nation that saw itself as more than Britain’s equal. So will the current leadership in HM Government allow history to repeat itself – or should they try a different approach altogether?

Grace Theodoulou is the Policy Fellow at the China Observatory at the Council on Geostrategy.

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