Page:ISC-China.pdf/13

Rh so keen to take Chinese money that it has not been watching China's sleight of hand whilst it overtly penetrated the UK's Energy and Industry sectors: issues that are explored in Part Two of this Report.

China's ruthless targeting is not just economic: it is similarly aggressive in its interference activities, which it operates to advance its own interests, values and narrative at the expense of those of the West. While seeking to exert influence is a legitimate course of action, China oversteps the boundary, and crosses the line into interference in the pursuit of its interests and values at the expense of those of the UK. For example, China has been particularly effective at using its money and influence to penetrate or buy Academia in order to ensure that its international narrative is advanced and criticism of China supressed. This helps to reinforce the CCP's narrative and gives its international posture external credibility—helping it on its way to becoming a world power.

China's attempts to influence the international narrative can also be seen clearly in its response to the recent Covid-19 pandemic. Rather than being damaged by it, China has worked hard on disinformation. It has greatly exaggerated its work to counter the virus and develop vaccines, and has sown seeds of doubt about the origins of the virus, to make the world believe that China was not at fault. Further, it appears positioned to capitalise on the damage to world economies and may well emerge from the pandemic stronger than before—and certainly stronger relative to many other countries that have suffered from the pandemic. We also consider this issue in Part Two of the Report.

So what of the UK's response to this threat? As the world's second largest economy (and one of the fastest growing), with a military increasing in size and capability, considerable levels of diplomatic engagement and a large digital sector which acts as a force multiplier, China has a significant impact on global affairs. The balance between security and prosperity requires dexterity and we understand that there are a number of difficult trade-offs involved. The Government's policy on, and strategy towards, China must take this into account when considering how to tackle the threats China poses to the UK.

The Government says its response is "" and "". The External Experts we spoke to were rather less complimentary. While we sought to examine whether the Government's strategy for dealing with such a large adversary was up to the task, they felt very strongly that HMG did not have any strategy on China, let alone an effective one, and that it was singularly failing to deploy a 'whole-of-government' approach when countering the threat from China—a damning appraisal indeed.

One of the factors involved is that, until recently, our Agencies did not even recognise that they had any responsibility for countering Chinese interference activity in the UK. Instead, they focused their efforts on China's 'covert' activity in the UK *** resources were diverted onto the acute counter-terrorism threat arising from Syria. Time and again resources have had to be diverted to tackling the terrorist threat, and it is clear that, historically, China did not receive as much attention as ***.