Dowden names China as the main threat to the UK’s economic security.

According to Deputy Prime Minister Oliver Dowden, China is the “largest state-based threat” to Britain’s economic security.

It comes as records show that the government intervened in eight planned Chinese takeovers of UK firms last year due to national security concerns.

This was more than any other country, but agreements in the United Kingdom and the United States were also targeted.

Mr Dowden stated that the judgments were “country agnostic,” but that he was “clear-eyed” regarding the UK’s national security.

 

“I’ve made it clear that I do not want us to decouple from China; I do not believe it is in our best interests,” he said.

“At the same time, we must be clear-eyed about protecting our national security, just as the Chinese are.”

The government has the authority to restrict or impose remedies on investments deemed to constitute a national security concern under the National Security and Investment Act 2021.

The Cabinet Office stated in a report that it received 866 notifications regarding potential breaches in the previous fiscal year, relating to fields such as defense, energy, advanced materials, and communications.

It chose to “call in” 65 of them for additional evaluation, 42% of which included Chinese acquirers, 32% with the UK, and 20% with the US.

The Cabinet Office approved the majority of these deals, but in 15 cases, it issued “final orders” halting, unwinding, or setting conditions on the arrangements to protect national security.

It stated that eight of these final orders involved acquirers from China, four from the United Kingdom, and three from the United States.

When asked why Chinese deals were being targeted disproportionately, Mr Dowden stated, “The first [reason] is China is just a very big investor, globally.” The second point is that, as we stated in our national security review, China is the most serious state-based danger to economic security.

“It’s not surprising that we should scrutinize Chinese transactions.” But we also look at everything.”

In recent years, regulators around the world have targeted Chinese enterprises on concerns that the Chinese government may utilize them for spying purposes.

One prominent example is telecoms giant Huawei, which was barred from the UK’s 5G mobile networks in 2020, a move that was replicated by other countries.

TikTok, a Chinese-owned social networking app, was banned on UK government devices last year as part of a security review.

Mr Dowden stated in the study that the National Security and Investment Act was intended to be “light touch,” encouraging investment in the UK while also defending national security “in an increasingly volatile world.”

He told the BBC that rejecting or imposing remedies on deals will give foreign investors more confidence to invest in the UK “because they know it’s safe.”

“However, we cannot find ourselves in a situation where we completely decouple from an economy like China’s; it is not in our national interest in terms of jobs and prosperity,” he added.

“What we need to do is reduce the risk of that engagement.” And that is exactly what this type of law allows us to do.”

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