Labour’s softening stance towards China reinforced by dropped spy case

Once, before the election, Labour’s approach to China was forthright. The party promised to declare China’s systematic repression of its Uyghur Muslim minority as a genocide. Its MPs united to support a genocide amendment to a 2021 trade bill, voting with Tory rebels and only failing to defeat Boris Johnson’s government by 11 votes. But in the past week recriminations have swirled after the prosecution of two Britons accused of spying for China was dropped. A refusal by the government to describe China as a national security threat has reinforced Labour’s already softened approach to Beijing and sharpened focus on the figure at its heart: Keir Starmer’s national security adviser, Jonathan Powell. Critics say Labour is hastily pursuing a return to the “golden era” rapprochement led by David Cameron in 2015, when China’s president, Xi Jinping, came on a state visit and Beijing was given approval to build nuclear power stations in the UK. That collapsed after China crushed the pro-democracy movement in Hong Kong and repeatedly engaged in cyber espionage against British targets. Beijing then became a “decisive enabler” in supporting Russia’s war in Ukraine with critical components. “In opposition, there was a strong sense of moral conviction on Labour party policy on China,” said Luke de Pulford, director of the International Parliamentary Alliance on China, a cross-party group of China-sceptic legislators. “Now that seems to have fallen by the wayside in favour of a focus on trade, investment, sacrificed at the altar of perceived economic gain.” In the run up to the election, Labour had already lightened the policy load in its manifesto, promising “a long-term and strategic approach” to China that would be generated by an “audit of our bilateral relationship”. At the same time, threats from China continued. The chief executive of the Electoral Commission said last month that it took three years to recover from a Chinese hack between 2021 and 2022 in which the details of 40 million voters were accessed. An estimated 20,000 Britons have been approached by Chinese state actors on LinkedIn in the hope of stealing industrial secrets, the head of MI5 warned in October 2023. Over a quarter of a million military payroll records were compromised by hackers from China in May 2024. Powell, Tony Blair’s chief of staff between 1995 and 2007, arrived in November as national security adviser – in effect the prime minister’s most important geopolitical adviser. A political appointment, he is the first special adviser, reporting to Starmer, to hold the post. A veteran of the Northern Ireland peace negotiations, Powell had set up Inter-Mediate, a charity aimed at promoting dialogue between parties to a conflict. “If we ever want to secure lasting peace then we have to engage with our enemies, not just with those we like,” he said in a Guardian article in September 2021. Other figures were also trying to exert influence on China policy after Labour’s election victory. A couple of months before his nomination (and short-lived appointment) as UK ambassador to the US, Peter Mandelson – the only Labour peer to vote against the genocide amendment – said Britain had gone too far in its falling out with China. In September 2024, he also told the South China Morning Post “we need a relationship that enables us to cooperate with China when desirable and necessary”. Labour backtracked on its commitment to label Uyghur repression as a genocide in October 2024 before a visit to Beijing by then foreign secretary David Lammy. The month after, Starmer met Xi at the G20 summit in Rio de Janeiro, the first time leaders from the two countries had met since 2018. Other engagements followed. Rachel Reeves, the chancellor, visited in January, and said the UK should have “a pragmatic and good relationship” with countries around the world. She returned with pledges of £600m of investment over five years, though some specialists argued that was a poor return. “She shouldn’t have been getting out of bed for less than a billion,” said Sophia Gaston, a senior research fellow at King’s College London. Powell himself visited Beijing this July, meeting China’s foreign affairs minister, Wang Yi, in an announcement placed on the Chinese embassy’s website. “Powell expressed the UK’s willingness to enhance dialogue,” the Chinese statement said. Starmer will visit China, perhaps as soon as next year. Meanwhile, China was left off the enhanced tier of the Foreign Influence Registration Scheme (Firs) when it launched in July. It is only occupied by Russia and Iran. The enhanced tier requires anyone in the UK acting for a foreign power or entity across a full range of political and economic activity to declare their activities to the government or face sanctions. Even a proposal to only designate China’s military and espionage apparatus in the higher tier has not been implemented, amid Beijing’s threats of retaliation. The promised China audit never publicly materialised, with experts arguing it was too difficult to publish a frank document. Instead it was subsumed into a UK national security strategy published in late June by Powell’s team in the Cabinet Office, which promised “greater robustness and consistency” in dealing with Beijing. It is against this backdrop that Stephen Parkinson, the director of Crown Prosecution Service, revealed this week that for “many months” before August, he had tried and failed to get an assurance he thought necessary to prosecute Christopher Cash, a former parliamentary aide to backbencher Alicia Kearns, and his friend Christopher Berry. Both men were accused of spying for China, passing information from Westminster to the country’s ruling politburo – though they denied the charges. Parkinson had wanted Matthew Collins, a UK deputy national security adviser, to testify that China was currently “a threat to the national security of the UK”. But when it was clear the statement was not forthcoming, he abandoned the case. On Thursday, while visiting India, Starmer said he could “be absolutely clear no ministers were involved” in decisions relating what evidence to submit. Downing Street aides were emphatic that denial covered Powell as well. The allegation that China was seeking to obtain information from Westminster was novel, unlike accusations of hacking or industrial espionage. Yet, due to a still unclear set of circumstances, the trial of Cash and Berry did not begin, because the director of public prosecutions could not obtain what he wanted from the government machine. Whoever was at fault, it amounted to “pusillanimous judgment over what would upset the Chinese”, according to one former senior Whitehall insider. Gaston, a foreign policy expert, argues that any engagement with Beijing should always be undertaken from a position of confidence. “The last thing we want when the government is pursuing a relationship reset with China is to send a message that there were any constraints in its capacity to defend national security, and that we might not have all the right tools to sufficiently protect our democracy,” she said.