Watch: We’ll regret granting this embassy to hostile China
Is China our enemy or our ally? Is it an adversary or a partner? The trading relationship is huge, but so are the security risks.
In the City, China means big business. Last year the UK exported £30bn worth of goods and services to China while we bought £70bn worth from them. But we exported £3.5bn less to China than we did in 2024 and we bought £3bn more. So, it’s a big relationship – but it’s not a balanced one.
We sold China nearly £3bn worth of financial and business services last year, up about 30 per cent on the year before, so it’s no wonder that global business leaders here in the Square Mile want to keep that tap turned on.
But behind this economic relationship lies an uncomfortable and seemingly contradictory reality: China is hostile to us. The head of MI5 has warned that Chinese spying against the UK is carried out on “an epic scale.” The UK’s top spook, Ken McCallum, says “Chinese state actors present a national security threat to the UK every day”, including cyber espionage, clandestine technology acquisition, and covert influence campaigns.
China has hacked into our Electoral Commission, deployed spies in Parliament, conducted widespread industrial espionage and exerted influence over academic institutions.
China even runs a network of clandestine police stations to deploy its unique brand of justice to its own citizens here in the UK.
Major threat…and major trading partner
The UK doesn’t turn a blind eye to this, but we do hold our nose and offer platitudes about the important partnership and the economic necessity of the trading relationship. That relationship is significant, of course it is. The Bank of England said yesterday that one of the main reasons why inflation will slide back towards its target level this year is because of cheap imports from China.
The UK is a major global economy, nothing demonstrates that more than Canada, and we trade with plenty of countries whose politics, leaders, behaviour or conduct we don’t like. That’s just the way of it.
But China is unique in being a major trading partner and a major security threat, leading many people to ask whether this tension can go on indefinitely.
It seems that for most of Whitehall and governments of any colour, the answer is yes, it will.
The proposed new Chinese embassy, just a stone’s throw from here on the site of the old Royal Mint, is almost certainly going to be approved by the Prime Minister, perhaps as soon as this week. Reports suggest that giving it the green light was a condition of the PM making a trip to China later this month. And boy does Keir Starmer like his foreign trips.
If the embassy goes ahead it will be enormous; at more than 700,000 square feet it will be the biggest diplomatic site in Europe. It will contain 200 apartments within its secure walls along with a network of secret rooms that China redacted in its planning application.
China has perfected cyber espionage
Thanks to the Telegraph, we now know that some of those underground rooms will be dug out and extended, putting the site literally within touching distance of some of the UK’s most sensitive and important fibre optic cables; cables carrying everything from email traffic to critical financial data. One of the rooms closest to the cables will contain state of the art cooling equipment designed to remove the hot air generated, perhaps, by a vast bank of computers. Or perhaps it’s just a sauna for all those overworked embassy staff.
China has perfected the art of cyber espionage to an extent that makes Russian hackers look like bungling fools, so it’s no wonder that MPs from across the spectrum are alarmed by this. Labour’s Sarah Champion, who sits on the national security strategy committee, said “Multiple government agencies and government departments have raised concerns about this mega-embassy, “ adding “Our international partners have raised concerns about it.” She said: “Every security briefing I’ve had identifies China as a hostile state to the UK.”
Shadow security minister Alicia Kearns said that if China gained access to the cables – and they’d surely be tempted – it “would give the Chinese Communist Party a launch pad for economic warfare against our nation.”
UK giving away more than real estate
And it seems to me that beyond the specific threats posed, there’s something larger at stake here. By granting this vast diplomatic presence – so big, it’s effectively a Chinese government department on UK soil – we’re giving away more than real estate and risking more than our cybersecurity.
We are facilitating China’s ambitions in a way that almost legitimises them. And we’re doing this at a time when it’s as clear as day that the old arguments about trade righting all wrongs and trumping all concerns just doesn’t hold water. The world is more dangerous, more uncertain, more hostile and smart countries – smart leaders – are adopting more muscular and confident positions in response. This isn’t about protectionism, but pragmatism.
We don’t have to give the Chinese what they want. We can stand up to them and, so long as it’s mutually beneficial, we can continue to do business with them, but I strongly suspect that granting this particular embassy will be a mistake, and one that we’ll come to regret.