What should the ‘China Audit’ include – and should there be a public version?
The Tangram | No 05.2025
This is the fifth Tangram from Observing China, where the leading China experts give a diverse range of succinct responses to key questions on the development of the People’s Republic of China (PRC).
In late 2024, His Majesty’s (HM) Government commissioned a ‘China Audit’ – in other words, a comprehensive assessment of the United Kingdom’s (UK) relationship with the People’s Republic of China (PRC). This assessment, which published a call for evidence from the public, is led by the Foreign, Commonwealth and Development Office (FCDO), and aims to provide a coherent, cross-government strategy for Britain’s approach to the PRC, based on an audited review of the benefits and risks of bilateral engagement and investment.
Initially, the Audit was scheduled for release in the spring of 2025, with no specific date given. But, according to a report by Reuters last week, the Audit will be published in ‘early June’ – so in the coming weeks, if there is no delay.
But will there be a public version, as there was with the Integrated Review Refresh (IRR) – the policy paper published by the Cabinet Office, akin to a national security strategy – in 2023? And if so, what aspects of the bilateral relationship should be covered by the Audit? In this week’s Tangram, we ask four experts, who have spent their careers analysing UK-PRC relations, the question all PRC experts have been pondering since late last year: What should the ‘China Audit’ include – and should there be a public version?
Charles Parton OBE
Chief Advisor, China Observatory, Council on Geostrategy
The second part of the question is easier to answer: yes, a published PRC strategy is important. The PRC affects most ministries, making consistency across departments essential. The vetting of most civil servants does not allow them to read documents classified as secret; and any document classified at the lower, widely available level of ‘official sensitive’ will leak. It is better to be open (although a few elements of a strategy will have to remain classified). Beyond government, business, academia, society – and the Chinese – the public need to understand the background and reasons for policies towards the PRC. For example, in the crucial technology sector, startups and academics cannot be expected to know and understand the limits of cooperation if a strategy does not set out the reasons for restrictions clearly.
As for the content of the ‘China Audit’, it must fulfil ministers’ pledges that national security is HM Government’s top priority. The big challenge is reconciling that with economic growth and combatting climate change. Laying out and implementing policies requires the right structures to be in place. In turn, those must be able to draw on deeper PRC expertise, from both inside and outside HM Government.
This suggests four priorities for the Audit:
Setting up a cabinet level ‘China committee’, chaired by the senior Cabinet Office minister or the National Security Adviser, and attended by ministers of all departments to which the PRC is relevant.
Establishing a Scientific Advisory Committee, a centre of expertise on science and technology security – the main area of threat – to coordinate the planning and implementation of protective measures across government, business and academia. This would be the ultimate authority for deciding on Chinese investment, cooperation, use in the UK economy, etc., in the science and technology area.
Adopting a whole-of-UK approach to combat the much-used Chinese Communist Party (CCP) tactic of going round the back of central governments and dealing directly with local governments, which are often less aware of CCP issues and methods.
Raising expertise on the PRC within the central and local government. This requires wider and deeper training of those in PRC-facing jobs, closer collaboration with PRC experts outside government (including consultations on policy) and a more efficient use of funding to think tanks and universities carrying out research for ministries.
Isabel Hilton OBE
Member of the Advisory Council, China Observatory, Council on Geostrategy and Visiting Professor at King’s College London
Few would quarrel with the objective of the ‘China Audit’: in a radically changing global landscape – and following sometimes extreme shifts in the UK’s own approach – a thorough review of the risks and benefits of this key relationship to produce clarity on British priorities was clearly to be welcomed.
It would be no surprise, however, if the exercise revealed tensions between the importance of being wide-reaching and the requirement for strategic discretion.
Since the PRC is the world’s second largest economy, contacts with the UK operate across culture, the economy, education, industry, science and security. If meaningful guidance is to reach all the people who deal with Beijing, many of whom will have little or no background in the PRC’s language, history, culture or current political realities, there is a clear case for the Audit to be wide-ranging, comprehensive and public.
On the other hand, if it is to offer practical, strategic guidance on how to navigate the complexities of the relationship, there will be analysis and observations which would best be kept close. Every aspect of Britain’s current policy – challenge, compete, cooperate – has grown more complicated in the last five years. Protecting national security in a digital world dominated by Chinese technology – alongside the PRC’s close relationship with Russia – presents challenges which barely existed a decade ago. Alignment with partners is more fraught as alliances shift and Donald Trump, President of the United States (US), seems bent on undermining those which exist. Uncertainty in both renders engagement subject to greater risks on multiple fronts.
Given that none of these complications are likely to diminish in the near term, a useful contribution the Audit could make in the public aspect of its work would be to encourage HM Government to build on the existing commitment to nurture and invest in UK expertise on the PRC at every level. Chinese diplomats and business people frequently possess a solid background in English language and related skills. There is a large disparity in size between Britain and the PRC. It should not be amplified by a disparity in expertise.
George Magnus
Member of the Advisory Council of the China Observatory, Council on Geostrategy
In setting a PRC strategy, the government needs to be unequivocally clear about two things: Britain’s geopolitical, economic and security interests in a fracturing world; and where these might be undermined by the practices, policies and ambitions of the CCP. The narrow business and economic related interests of, say, HM Treasury or the Department of Business and Trade alone need to be subordinated to a whole-of-government approach involving all the main ministries, especially Defence, National Security, and the Department for Science and Innovation. An Audit which comes up short on these two central ideas will not be a serious attempt to define the UK’s PRC strategy.
The Audit should insist that Britain is open to, and up for, commercial and other engagement with the PRC, provided it does not cross economic and national security red lines. It should emphasise in which areas of certain sectors – for example, critical infrastructure, advanced technologies, power and energy, transportation including electric vehicles, and science and research collaboration – it is important to exclude the PRC from ownership, participation and acquisition, and why. There should be a particular focus on the UK’s vulnerabilities to supply chain chokeholds, cybersecurity and other data security matters, and important areas for Britain to build resilience and relations with ‘friendly’ states.
The Audit should state firmly that the PRC is not simply a large country with which it is important to have a framework for commercial relations, but an adversary pursuing its own strong interests in global governance, standards, values, protocols and interactions with other nations – which often conflict with the UK’s.
This would help to frame policies and goals, and add substance to HM Government’s bland ‘challenge, compete, cooperate’ mantra.
There should certainly be a public version to contextualise and explain to the public much about the PRC where levels of familiarity and insight are low, and why certain areas are open for business or involvement and some are not.
Senior Director of Policy, China Strategic Risks Institute
It is my view that HM Government’s ‘China Audit’ has been superseded by several ministerial visits to Beijing, and by the Trade Agreement between Britain and the US. The latter includes provisions which require the UK to align with the US on its PRC policy regarding economic security, data security, forced labour supply chain screening and procurement screening.
This makes it all the more important for any China Audit to address firstly the historic Chinese investment in Britain’s critical national infrastructure. Secondly, it should create a funding pipeline to bring outside expertise on the PRC into government, separate from the civil servant recruitment process. Finally, the Audit should provide a full account of the UK’s supply chain dependencies on the PRC.
Apart from the sensitive sections in the Audit pertaining to national security, there is little reason why it should not be published, and the public brought along in support of a clear-eyed PRC strategy.
The Audit offers an opportunity for HM Government to clarify how its PRC policy will be coherent, while also in line with the commitments made earlier this month to the US – Britain’s closest partner in the recent bilateral trade agreement. As well as this, the Audit provides an opportunity for the government to outline what steps it is taking to protect growth, reindustrialise and ensure resilience in a geopolitical world which is increasingly unstable – and one where many analysts have concluded that there is a significant possibility that under the orders of Xi Jinping, General Secretary of the CCP, the People’s Liberation Army – the PRC’s armed forces – may invade Taiwan within the next few years.
Grace Theodoulou – Policy Fellow, China Observatory
Email: grace@geostrategy.org.uk
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