China Acquired UK Military Tech

The Trojan Dragon: How Chinese Investment Acquired UK Military Technology

A vast wave of Chinese capital has flooded into British industries this century, with a massive financial injection of many billions of pounds facilitating Beijing's access to sensitive, military-grade technology. Investigations reveal a calculated strategy, leaving the UK's national security apparatus grappling with the consequences of a relationship that was once celebrated as a "golden era". This extensive financial campaign, now valued at over £45 billion, signals a new front in the global contest for technological supremacy, placing British innovation at the heart of a geopolitical struggle.

Beijing’s Strategic Blueprint

China’s investment offensive escalated significantly after a 2015 state directive. The plan, which was called "Made In China 2025," was an unambiguous declaration of intent, a blueprint designed to establish the nation as the world's preeminent force in high-technology sectors. The strategy pinpointed ten key areas for global dominance, including critical fields such as aerospace, robotics, and electric vehicles. This was not merely economic policy; it was a long-term vision for geopolitical leverage through technological superiority. The United Kingdom, due to its open economy and world-class research base, became a primary target. According to AidData, a US-based research institute that tracks international financial flows, more of this targeted investment landed in the UK relative to its economic size than in any other G7 nation. This influx of capital, while often presented as purely commercial, frequently aligned with Beijing's overarching strategic ambitions.

The Open Door Policy

The sheer scale of the investment highlights a period where, in the words of a previous director of GCHQ, Britain’s approach was excessively open when it came to strategically vital sectors. For years, successive governments championed close economic ties with Beijing, viewing China as a vital source of investment to fuel economic growth. This culminated in the 2015 state visit of President Xi Jinping, where the Conservative government at the time enthusiastically announced a fresh "golden era" in bilateral relations. This open-door approach created a fertile environment for Chinese entities to acquire stakes in or purchase outright British companies operating at the cutting edge of science and technology. The focus on economic benefit often overshadowed the potential national security risks, a dynamic that intelligence chiefs now warn has left the country vulnerable.

A Flood of Covert Capital

The BBC received special preliminary data meticulously collected by AidData, a research center based at the Virginia university of William & Mary. As a foremost expert in monitoring overseas government spending, AidData’s work is supported by a variety of state bodies and philanthropic organizations worldwide. Their findings paint a detailed picture of China's financial strategy. The executive director of AidData, Dr. Brad Parks, explained that while numerous Chinese state-backed investments were legitimate commercial ventures, a significant portion was strategically directed. These investments were meticulously aligned with the objectives laid out a decade ago in the "Made In China 2025" plan. The research reveals a calculated pattern of acquisition targeting specific knowledge and capabilities within the UK's most advanced industries. This has effectively allowed for a migration of skills and intellectual property on a scale that is only now becoming fully understood.

A Vision for Global Dominance

Professor Keyu Jin, from a university of science and technology in Hong Kong, characterises the "Made in China 2025" strategy as a remarkably far-sighted piece of industrial policy. It represents the kind of capacity for forward-thinking strategy that has consistently defined Beijing's approach to national development. Professor Jin argues that this multi-decade planning is an advantage of China’s political system and something from which other nations could learn. The plan sets ambitious goals for the country to become the undisputed industry leader across a swath of high-tech sectors. This long-range perspective allows for sustained investment, strategic financing, and the coordination of state and private enterprises to achieve national objectives. From Beijing's viewpoint, the outcomes have been described as truly extraordinary, propelling the nation closer to its goal of technological self-sufficiency and global leadership.

The Imagination Technologies Saga

The case of Imagination Technologies, a company located in Hertfordshire, serves as a stark illustration of the consequences of this investment drive. The company specialises in the intricate design of semiconductors, the miniature pathways that power everything from smartphones to advanced computers. In 2017, the firm found itself in a vulnerable position. It had recently lost its most significant client, Apple, leading to a dramatic collapse in its stock value. This vulnerability was exploited by Canyon Bridge, a buyout group that acquired the British company for £550 million. The deal, on the surface, appeared to be a straightforward commercial rescue. However, the financial structure behind the acquisition revealed a direct link to the government in Beijing, raising immediate questions about the acquirer's ultimate intentions for the company's valuable intellectual property.

The State Behind the Fund

The specific fund from Canyon Bridge that purchased Imagination had a single, powerful investor: Yitai Capital. The largest stakeholder in Yitai Capital is China Reform, an organisation that reports directly to the State Council, the central administrative body tasked with implementing party policies and laws. This connection placed Imagination's advanced technology directly under the influence of a key instrument of the Chinese state. The timing and nature of the acquisition were also telling. A couple of months prior to securing the UK deal, Canyon Bridge had attempted a similar takeover of a US-based semiconductor business. That purchase was ultimately blocked by America's robust investment-screening legislation, forcing the fund to seek a more permissive regulatory environment, which it found in Britain.

A Treasure Trove of Expertise

The fundamental asset of Imagination Technologies was not physical but its collection of intellectual property. The company's worth was embedded in the decades of accumulated knowledge of its engineering staff. A buyer was not just purchasing a company; they were acquiring a deep well of knowledge in a strategically critical field. Furthermore, the algorithms and designs developed by Imagination, while created for commercial products, possessed a dual-use potential. This meant the technology could be repurposed for military applications, including the guidance systems for missiles and the operation of unmanned aerial drones. The strategic implications of such technology falling under the control of a foreign power with clear military ambitions were profound and deeply concerning for security officials.

An Unequivocal Assurance

Ron Black, the former chief executive of Imagination, provided his first public remarks following his departure, detailing the assurances he received. He stated that British authorities thoroughly vetted the transaction. During this process, Canyon Bridge stated unequivocally that China Reform would act as a silent financial backer, solely interested in generating a financial return. These promises were crucial in securing approval for the deal. However, events that unfolded later suggested a different agenda was at play from the outset. The initial assurances of a hands-off approach appeared to be a strategic manoeuvre to navigate the UK's then-less stringent regulatory checks, allowing the acquisition to proceed without raising significant alarm within government circles.

A Summons to Beijing

In 2019, the situation took a dramatic turn. Ron Black recounted being called to a meeting held in the Chinese capital. There, he was instructed to report directly to China Reform. The request was not merely for collaboration; it was a directive to oversee a comprehensive transfer of the intellectual property and deep-seated expertise of Imagination to China. Black recalled a representative from China Reform being explicit about the plan. The objective was to move knowledge directly from the UK engineering team to their counterparts in China. Once this intellectual transfer was complete, the British engineers could be made redundant, and substantial profits would follow. This laid bare the true strategic, rather than purely commercial, nature of the acquisition.

Refusal and Retaliation

Ron Black refused to comply with the directive. He stated that a few months after, China Reform attempted a boardroom coup. The state-backed entity attempted to appoint four new board members straight onto the Imagination Technologies board. According to Black, these individuals had no discernible experience or understanding of the highly complex semiconductor industry. Their only apparent qualification was a direct connection to China Reform. This move was a clear attempt to assert direct control over the company's operations and strategic direction. It confirmed Black's growing fears that the ultimate goal was not the financial health of the company, but the appropriation of its valuable technology for the benefit of the Chinese state.

A Plea for Intervention

Convinced that the intellectual property of Imagination possessed the potential for military use and fearing its transfer, Ron Black started contacting his connections within the British government. He explained that while he received a receptive audience, the official response was muted. He was informed that the situation was considered a commercial issue and that there was little the government could do to intervene directly. This hands-off approach highlighted a significant gap in the UK's ability to protect strategically important assets from foreign takeovers. The existing legislative framework was ill-equipped to handle such complex cases where commercial investment intertwined with national security interests, leaving vital technology exposed.

Resignation and a Sudden Spark of Interest

Deeply concerned about the potential movement of defense-applicable technology, Ron Black tendered his resignation. He states that it was then that British officials began to show a serious interest in the unfolding situation. The prospect of losing a prominent chief executive over national security concerns appeared to trigger alarm bells in Whitehall. In response to this new level of government scrutiny, China Reform halted its attempt to install its preferred directors on the board. This sudden reversal suggested that while the government had been slow to act, its intervention, once prompted, carried significant weight and could alter the course of events.

A Final Act of Dismissal

Following the government's intervention and China Reform's retreat, Ron Black withdrew his resignation, hoping to steer the company through the crisis. However, his reinstatement was short-lived. His employment was terminated just three days afterward. A tribunal for employment matters later ruled his dismissal was unjust, a decision that vindicated his stance but came too late to prevent the subsequent transfer of technology. After his departure, Imagination's homegrown intellectual property was moved to China. This sequence of events demonstrated the ruthless efficiency with which the state-backed owners pursued their objectives, removing obstacles to achieve their ultimate goal of acquiring the company's technological crown jewels.

Corporate Denials and Official Statements

In response to these events, Imagination Technologies has maintained that its systems do not feature in any military products. The company told Panorama that it has always complied with all applicable export and trade compliance laws regarding the business of licensing its semiconductor designs. Similarly, Canyon Bridge stated that the deal was managed and sourced entirely by its own team and advisers, downplaying the role of its state-backed investor. Panorama also sought a response from China Reform for comment on Ron Black's allegations, but the organisation did not respond. The official lines from the companies involved contrast sharply with the detailed account of the former chief executive, leaving significant questions about transparency and accountability.

The Embassy’s Position

The Chinese Embassy in London issued a statement asserting that its administration consistently demands that Chinese firms functioning abroad adhere rigorously to local statutes and rules. The embassy added that these companies make positive contributions to local job creation, societal progress, and economic expansion—actions that it claimed have been appreciated by numerous nations. This official position presents Chinese foreign investment as a purely positive force for mutual benefit, a narrative that is challenged by cases like Imagination Technologies, where commercial activities appear to serve clear strategic state objectives that may not align with the host country's national interests.

A New Era of Scrutiny

The landscape for foreign takeovers within the UK has changed significantly since 2017. Recognising the growing threat, officials introduced the National Security and Investment (NSI) Act in 2022. This legislation grants ministers sweeping new powers to scrutinise and, if necessary, block acquisitions and investments in 17 sensitive areas of the economy, including advanced materials, artificial intelligence, and communications. The Act allows for retrospective reviews of deals completed since November 2020. Since its introduction, officials have used these powers to block several transactions linked to China, particularly in the semiconductor sector, signalling a significantly more robust and interventionist approach to protecting national security.

The Unresolved Dilemma

Despite the new legislation, the puzzle of balancing trade with China against Britain's safety is yet to be solved. Sir Jeremy Fleming, a former director of GCHQ, described it as the "trillion-dollar question." He acknowledged that the United Kingdom has reaped benefits from commercial ties and capital from China during the last two decades. However, he also warned that the nation has sometimes forgotten that this capital could be leveraged against the UK's national interests. This delicate balancing act between economic prosperity and national security continues to dominate the UK's foreign policy debate. The current Labour government, like the previous Conservative administration, faces the reality that Britain requires economic expansion, and China remains a powerful engine of the global economy.

A Question of Naivety

Sir Jeremy Fleming stated his own opinion that Britain had been excessively permissive in providing entry to vital sectors of technology and science. He contrasted Britain's open approach with the stringent controls exerted by the Chinese state. Beijing has acted with great precision, he noted, preventing Western firms from participating in critical areas of its own industry that it deems strategically important. This asymmetry in market access highlights a broader naivety that some experts believe characterised Western attitudes towards China. John Bolton, who served as a US national security advisor, suggested that in 2017-18, Europe and some American businesses were reluctant to believe they were returning to a situation resembling a Cold War.

A Cautious Re-engagement

The current government is attempting to navigate this complex relationship with a strategy of "progressive realism." Recent figures show that total trade in goods and services between the UK and China was approximately £103 billion in the year leading up to mid-2025. While economic ties remain substantial, there is a clear shift in tone. The UK now officially acknowledges China as the most significant state-based threat to its economic security. In September 2025, the new Business and Trade Secretary, Peter Kyle, led the first UK-China Joint Economic and Trade Commission since 2018, aiming to secure market access for British businesses while also raising concerns about human rights and unfair competition. This approach seeks to find areas for pragmatic cooperation while maintaining firm boundaries on security.

The Parliamentary Watchdogs

Parliamentary scrutiny of the government's China policy has intensified. The Foreign Affairs Committee in the House of Commons, chaired by Dame Emily Thornberry, has expressed concern over the government's lack of transparency. The committee was promised that a comprehensive "China audit," a review of UK-China relations committed to in the Labour manifesto, was set for publication. However, Dame Emily noted that while the audit has happened, the administration has decided not to release the full report, offering only a brief summary in its place. The Foreign Office stated that the full audit was not published due to its sensitive security designation, a response that has failed to satisfy MPs demanding greater openness and a clear, publicly articulated strategy.

The Future of UK-China Relations

Looking ahead, the relationship between the United Kingdom and China is set to remain multifaceted and fraught with tension. A complete economic decoupling is unlikely, but a selective disengagement in sensitive sectors will continue and likely expand. While opportunities for British businesses exist in areas like green technology, financial services, and luxury goods, they will be increasingly balanced against national security considerations. The challenge for policymakers is to create a framework that allows for secure trade and investment, leveraging China's economic power for UK growth without compromising the nation's critical infrastructure, technological advantage, and core values. As Sir Jeremy Fleming cautiously noted, while a considerably more robust system is now active, the procedure is by no means "watertight."