Eyes wide open? Britain’s China gambit and the machinery of statecraft

The photographs from Beijing tell one story. The policy documents tell another. Reconciling them is the analyst’s burden.

Keir Starmer stood beneath the soaring ceilings of the Great Hall of the People on 29 January 2026, receiving what Chinese state media pointedly described as the “warmest of welcomes.” President Xi Jinping praised the Labour government for its “important contributions” to China-UK relations. A signed Manchester United football - Xi’s team - was presented as diplomatic gift. The choreography was meticulous. The message unmistakable: the prodigal son returns.

Eight years since a British Prime Minister last visited Beijing. Theresa May’s January 2018 trip produced little of consequence; relations subsequently cratered over Hong Kong, Huawei and the pandemic’s origins. Now Downing Street trumpets a triumph of pragmatic statecraft. The headline numbers appear to justify the fanfare: £2.2 billion in export deals, roughly £2.3 billion in market access wins over five years, AstraZeneca’s $15 billion China investment commitment through 2030. Whisky tariffs halved from 10% to 5% - potentially worth £250 million to Scottish distillers over five years. Visa-free travel for British citizens, aligning the UK with France and Germany.

Downing Street insists this is not a pivot. The language is carefully calibrated: “more sophisticated relationship,” “pragmatic engagement,” “eyes wide open.”

They are technically correct. This is not choosing China over America. It is hedging - keeping options open whilst Washington proves unpredictable. The difference matters. Yet Western allies will perceive these actions as strategic reorientation toward Beijing at a moment of acute transatlantic tension. Perception, in diplomacy, is often indistinguishable from reality.

Rational adaptation - with consequences

Britain is hardly alone in this recalibration. Ireland’s Taoiseach Micheál Martin visited Beijing in early January - the first such visit since 2012. Finnish Prime Minister Petteri Orpo signed eleven cooperation agreements during his four-day trip later that month. South Korea’s President Lee Jae-myung met Xi on 5 January - the first summit of its kind since 2019. Canada’s Mark Carney cut a deal on canola and electric vehicles that promptly drew Trump’s threat of 100 per cent duties. EU-China bilateral trade rose 5.4 per cent in the first eleven months of 2025, reaching nearly $750 billion despite ongoing disputes over electric vehicles and subsidies.

None of this amounts to abandonment of the United States. It is adaptation - rational adaptation - to economic coercion dressed as trade policy. And it is pushing American allies to look east, toward a China whose trade surplus hit a record $1.19 trillion in 2025.

What Trump’s Davos speech made explicit now plays out in capital after capital. Great-power logic. Economic pressure replacing rules-based cooperation. Tariffs on Chinese goods hit 145 per cent at their peak last spring. Duties on South Korean imports were raised from 15 per cent to 25 per cent on 27 January. Earlier that month, eight NATO allies - the UK, Denmark, Norway, Sweden, France, Germany, the Netherlands, and Finland - faced tariff threats over Greenland, withdrawn eventually after talks with Rutte at Davos, but the damage to trust lingers.
These are not negotiating tactics within an alliance framework. They are something else entirely.

Trump’s response to Starmer’s visit was characteristically blunt: “Well, it’s very dangerous for them to do that.” Downing Street scrambled. Officials noted that Washington had been “aware” of the trip in advance. They pointedly observed that Trump himself plans to visit China in April. Starmer insisted that he and Trump “understand each other.”

The defensive posture is unmistakable. A government seeking permission rather than exercising independent judgment.

Officials in European capitals, in unguarded moments, concede they are caught: American markets remain vital, but unpredictable coercion pushes them toward Beijing. Days before Starmer boarded his plane, his government approved China’s “mega-embassy” at the Royal Mint Court site - despite very real security concerns. That approval cleared the final obstacle to the visit. He brought nearly sixty business leaders with him.

The embassy: what the approval signals

This is where official rhetoric collides with institutional reality.

The 20,000 square metre complex will become China’s largest diplomatic facility in Europe. Planning disputes and security concerns had stalled the project for seven years. MI5 warned of the “epic scale” of Chinese espionage operations in Britain; hostile intelligence activity against the Ministry of Defence rose more than 50 per cent over the past year. Critics flagged the site’s proximity to fibre-optic cables carrying sensitive financial data—surveillance vulnerabilities that intelligence assessments deemed significant.

The Intelligence and Security Committee’s language was unambiguous: China maintains “the largest state intelligence apparatus in the world” and employs a “whole-of-state approach” that co-opts “every state institution, company and citizen.”

The approval came regardless. The government’s justification, that consolidating Chinese diplomatic operations from seven locations into one would yield “clear national security benefits”, struck security professionals as counterintuitive at best. Charitable interpretations require considerable imagination.

What the approval actually demonstrated was leverage. Xi Jinping raised the embassy directly with Starmer during their first meeting in 2024. China’s Foreign Ministry warned that failure to grant permission would mean Britain “bearing all consequences.”

It would be naive to pretend major diplomatic facilities do not facilitate intelligence operations. Such opportunities cut both ways, of course; the host surveils the guest as much as the reverse. All nations understand this. The question is whether Britain extracted commensurate concessions for providing China with what security officials describe as a substantial new collection platform adjacent to the City of London.

Nothing reported publicly appears commensurate.

The espionage dimension

Weeks before Starmer’s departure, MI5 issued an alert to MPs, Peers, and Parliamentary staff: Chinese intelligence officers are actively attempting to recruit people with access to sensitive information about the British state. The Security Service identified two online accounts - ostensibly recruiting for companies called “BP-YR Executive Search” and “Internship Union” - that were in fact operated by China’s Ministry of State Security.
The tradecraft is sophisticated. All-expenses-paid trips to China. Compensation via cash or cryptocurrency. Long-term cultivation through professional networking platforms. Targets include Parliamentary staff, think tank employees, geopolitical consultants - anyone working alongside government, including MPs and members of the House of Lords.

Security Minister Dan Jarvis announced £170 million for encrypted technology and safeguards against Chinese cybercrime. A new Military Intelligence Service and Defence Counter-Intelligence Unit have been established. These are welcome steps. Yet they sit uneasily alongside the diplomatic warmth displayed in Beijing.

The government also announced a “cyber dialogue” with China - a forum intended to manage cyber threats through improved communication. Officials acknowledge they do not expect the forum to end Chinese cyber attacks on UK targets. They hope it may mitigate dangers and prevent miscalculation. The Obama administration established a similar cyber hotline with Beijing in 2015. It produced results. Until it didn’t.

Engagement with China is rational. Britain cannot ignore the world’s second-largest economy. But such engagement must proceed with clear-eyed awareness of the intelligence threat - and with institutional machinery capable of managing that threat whilst extracting genuine benefit. Whether Britain possesses such machinery is increasingly uncertain.

A forgotten heritage

Britain’s history of statecraft runs far deeper than current practice suggests. A century ago, officials developed what Treasury economists called the “fourth fighting service”: a system for wielding economic pressure that required unprecedented coordination across government, systematic intelligence gathering and genuine expertise in how global economic systems functioned.

That machinery was not built overnight. It demanded sustained investment in capabilities, institutional memory across changes of government and political will to resource properly the intelligence and diplomatic services upon which effective statecraft depends. Early attempts at economic warfare during the First World War were characterised by departmental rivalry, inadequate data and strategic incoherence - until dedicated machinery imposed coordination and built genuine capability.

The parallel with today is uncomfortable. Britain is attempting to navigate the most complex strategic environment in a generation - managing relationships with an unpredictable America, an assertive China, and a fragmenting global order - whilst simultaneously hollowing out the very institutions that should enable sophisticated statecraft.

The diplomatic service under strain

The Foreign, Commonwealth and Development Office faces planned spending decreases averaging 8.3 per cent annually in real terms between 2025-26 and 2028-29 - the largest reduction among government departments. A potential headcount reduction of up to 25 per cent is anticipated. The overseas aid budget falls from 0.5 per cent of Gross National Income to 0.3 per cent, diminishing Britain’s soft power in precisely the regions where Chinese engagement expands most rapidly.

The Independent Commission for Aid Impact has warned that reductions in senior development roles are “undermining FCDO’s credibility.” Britain’s diplomatic network - the eyes, ears and relationships that inform effective policy - is being diminished at the moment it is most needed.

Meanwhile, MI5 Director-General Ken McCallum warns that Chinese state actors present a “daily national security threat to the UK.” Some additional investment has followed: £130 million for Counter Terrorism Policing and the National Cyber Security Centre’s work with critical businesses. But the scale of the China challenge demands sustained, long-term investment. Not reactive adjustments.

Washington’s problem

Erosion of transatlantic economic cohesion weakens America’s ability to coordinate export controls, align sanctions and hold a unified line on Taiwan. Security ties persist. NATO is not dissolving. Yet.

But when allies diversify trade toward Beijing, their willingness to absorb economic pain in a future crisis diminishes. This is the calculus Washington must confront - and largely created.

The Five Eyes intelligence partnership has been the backbone of UK security cooperation for decades. American officials voiced “deep concern about providing China with potential access to the sensitive communications of one of our closest allies” following the embassy decision. Former British diplomat Charles Parton has warned that security concerns over UK networks “may make the Five Eyes partners, and perhaps others, less inclined to co-operate with the UK in the future.” Those concerns predate the embassy. In October 2025, Dominic Cummings alleged that in 2020 the Cabinet Secretary informed him and Boris Johnson that China had purchased companies controlling data infrastructure used by British intelligence and government departments - “they didn’t hack into the system, they bought the system and owned it.” The government denies the most sensitive data was compromised; the founding head of the National Cyber Security Centre called the claim “categorically untrue.” Though one would be naive to expect a public admission - and the alleged method accords with documented Chinese tradecraft elsewhere. 

Whether you call it commercial pragmatism or strategic realignment matters less than the outcome: allies are adapting to a new great-power order. Rationally. Even if that rationality carries its own risks.

The asymmetry problem

The economic fundamentals underscore Britain’s limited position. The UK runs a total trade deficit with China of £42 billion. Total bilateral trade reached £103 billion in the four quarters to mid-2025, but UK exports to China fell 10.4 per cent year-on-year whilst UK imports from China rose 4.3 per cent.

The “wins” from Starmer’s visit require context. The whisky tariff reduction matters for Scottish distillers - but represents a fraction of the broader picture. The AstraZeneca investment, the visit’s centrepiece, is a commitment by a British company to invest more in China. Not Chinese investment flowing into Britain. One more such victory, as Pyrrhus warned, and we are undone.

If the relationship with China reveals Britain’s limited economic leverage, the Huawei precedent reveals something else: limited political independence from Washington. In 2020, Boris Johnson reversed an earlier decision to allow Huawei involvement in Britain’s 5G network, following intensive American pressure. Washington’s concerns were not frivolous - US intelligence agencies warned that Huawei equipment could facilitate Chinese state espionage and threatened to curtail intelligence-sharing with Britain if the firm remained embedded in critical infrastructure. Britain’s own NCSC had assessed the risks as manageable with appropriate safeguards. Washington disagreed. And Washington prevailed. The decision cost the UK economy an estimated £18.2 billion and set back 5G rollout by two to three years.

The bind is uncomfortable. Resist American pressure over security grounds and risk the intelligence relationship that underpins British defence. Comply, and absorb substantial economic damage whilst reinforcing the perception of subordination. Now, with the embassy approval, Britain faces the inverse: proceed with engagement that Washington views as a security risk and absorb the consequences to Five Eyes trust anyway. The asymmetry runs in both directions - squeezed by China economically, constrained by America politically, and lacking the independent weight to set terms with either.

The honest assessment

Britain’s engagement with China is not inherently wrong. Middle powers must navigate between great power competition. Economic relationships with major economies are necessary. Diplomatic channels - even uncomfortable ones - are generally preferable to isolation.

But effective statecraft requires more than intentions. It requires institutional machinery to pursue multiple objectives simultaneously: engaging economically whilst defending against intelligence threats; maintaining alliance relationships whilst exploring new partnerships; understanding what leverage Britain actually possesses and how to deploy it.

That machinery is being allowed to atrophy. The diplomatic service faces cuts whilst the need for sophisticated engagement increases. Intelligence capabilities are enhanced reactively rather than strategically resourced for the long-term China challenge. The institutional memory and cross-government coordination that characterised Britain’s most effective periods of statecraft have given way to departmental silos and short-term thinking.
The structural reality is unavoidable. Britain now navigates great power competition without the collective weight of a larger bloc - neither fully aligned with an unpredictable Washington nor embedded in European coordination mechanisms. That position demands more institutional capacity, not less. It demands a foreign policy apparatus resourced for complexity, an intelligence community funded for sustained competition, and a political class willing to invest in instruments whose returns are measured in decades, not news cycles.

Starmer’s China gambit may prove wise or foolish depending on circumstances yet to unfold. What it has already exposed is the gap between Britain’s strategic ambitions and its institutional capacity to pursue them. The “fourth fighting service” - the sophisticated integration of economic, diplomatic and intelligence instruments - requires investment, coordination and sustained political commitment.

Without that machinery, Britain risks not hedging but drifting. Pursuing tactical opportunities without strategic coherence. Discovering too late that allies have drawn conclusions London never intended to signal.

The Prime Minister returned from Beijing with deals, photographs and assurances of a “more sophisticated relationship.” What remains to be built is the statecraft capable of making such sophistication a reality rather than a slogan. That requires resources, institutions and strategic seriousness that the current trajectory of British policy does not suggest.

Image credit: © Crown copyright / Simon Dawson / No 10 Downing Street. Open Government Licence v3.0 (https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)