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UK's £45bn China investment surge raises military tech transfer concerns
China has poured an estimated £45 billion ($59 billion) into UK businesses and infrastructure since 2000, with a significant portion directed toward high-tech sectors-including firms developing technology with potential military applications-a BBC Panorama investigation reveals. The spending peak aligned with Beijing's 2015 Made in China 2025 initiative, a state-backed blueprint to dominate 10 strategic industries, from aerospace to robotics.
Research by US-based AidData, shared exclusively with the BBC, shows the UK became the top per-capita destination for Chinese state-linked investments among G7 nations. While some deals were commercial, others advanced Beijing's long-term strategic goals, according to AidData's executive director, Dr. Brad Parks. The 2015 directive, he noted, marked a shift toward acquiring foreign expertise to accelerate China's technological self-sufficiency.
Semiconductor firm's acquisition sparks security alarms
One case under scrutiny is the 2017 takeover of Imagination Technologies, a Hertfordshire-based semiconductor designer whose chip architectures power smartphones and computers. Struggling after losing Apple as a client, the firm was acquired for £550 million by Canyon Bridge, a US private equity fund whose sole investor was Yitai Capital-controlled by China Reform, a state entity reporting to China's top leadership.
Two months earlier, Canyon Bridge's attempt to buy a US semiconductor firm had been blocked by American regulators. Yet the UK deal proceeded after assurances that China Reform would remain a passive investor. Ron Black, Imagination's former CEO, told the BBC he was later pressured in Beijing to transfer the company's intellectual property-including algorithms adaptable for missile and drone systems-to Chinese engineers, then dismiss UK staff. "They said, 'from the heads of the British engineers to the Chinese engineers, then lay off the British engineers and you'll make a lot of money,'" Black recalled.
After resisting, Black alerted UK officials but was told the matter was "private industry." He resigned in protest, prompting belated government interest. Though China Reform's bid to install four directors with no semiconductor expertise was halted, Black was fired days after withdrawing his resignation. An employment tribunal later ruled his dismissal unfair. Imagination maintains its technology remains civilian-only, while Canyon Bridge insisted the deal was "led exclusively" by its team.
"We have been far too free in allowing access to strategically important industries in science and technology."
Sir Jeremy Fleming, former GCHQ director
'Golden era' optimism clashes with rising security risks
The UK's openness to Chinese investment reflected a 2015 diplomatic thaw, when then-Prime Minister David Cameron hailed a "golden era" in Sino-British relations during President Xi Jinping's state visit. Yet by 2017, warnings emerged. Sir Jeremy Hunt, who served as health secretary and later foreign secretary, admitted: "We thought China was a friendly power... but under the surface, we sensed a much more assertive China."
Experts contrast the UK's lax oversight with China's rigid controls over foreign access to its strategic sectors. "They've been very strategic," said Fleming, noting Beijing's restrictions on Western involvement in key industries. The US, Germany, and Italy tightened foreign investment screens by 2018; the UK followed in 2022 with the National Security and Investment Act, granting powers to block high-risk deals.
Labour government faces same dilemma
Despite stricter rules, the UK's economic reliance on China persists. Chancellor Rachel Reeves visited Beijing this year to court investment, while Labour's pre-election China audit-a review of security risks-remains unpublished. Dame Emily Thornberry, chair of the Foreign Affairs Committee, criticized the secrecy: "We were promised transparency, but now we're told we'll only get 'a few lines.'" The Foreign Office cited "security classification" for withholding details but pledged to "protect UK interests."
Global lending spree slows amid pushback
AidData's research reveals China has lent £1.6 trillion ($2.1 trillion) overseas this century, peaking in 2016-17. Since then, recipient nations have tightened defenses. "Many countries woke up to the risks," said Dr. Parks. Yet Prof. Keyu Jin of Hong Kong University of Science and Technology argued China's long-term planning-unmatched by Western democracies-drove its success: "It's not a five-year thing. You set multi-decade goals."
John Bolton, former US national security advisor, called Europe's 2017-18 stance "naive," adding: "There was reluctance to admit we were slipping into Cold War dynamics." Bolton, recently indicted for alleged mishandling of classified information (he denies wrongdoing), said Western firms prioritized profits over security.
Unresolved tension: Growth vs. security
With the UK's economy stagnant, China's capital remains tempting. "There's not enough investment in Europe," said Jin. "China is happy to finance projects where national security isn't at risk." Yet Fleming warned: "The process isn't watertight." The challenge-balancing trade with safeguarding critical industries-endures as what he called "the trillion-dollar question."
