Starmer’s China surrender policy explained by expert ‘debt trap’ theor | UK | News

Sir Keir Starmer has issued a stark warning that the UK risks falling into China’s debt trap due to its dependence on borrowing from Beijing.

Leading economists and politicians have raised the alarm over hundreds of billions of pounds of UK debt owed by foreign investors.

Fears are growing that this dependence will allow China to meddle in Britain’s affairs and strong-arm the Government, which is caught in the ever-tightening evil of unaffordable spending and interest payments. The news emerged following a report that the latest Chinese espionage bombshell could spell the end of Keir Starmer.

Warnings came after the collapse of the spy case

The stark warnings emerged after Labor claimed prosecutors had dropped charges against two suspected Chinese spies after refusing to brand Beijing a security threat, The Telegraph reported.

The government will face fresh pressure on Monday over its stance on China; The Conservatives will threaten to start a debate in the House of Commons to force ministers to answer questions.

Former security minister Tom Tugendhat said he would use the occasion to accuse the Government of “selling out” to Beijing, while Alicia Kearns, who worked with one of the suspected spies, will ask who made the decision not to name China a threat.

Powell gave advice on espionage case

Labor admitted for the first time on Sunday that Sir Keir’s national security adviser Jonathan Powell had advised on matters related to the spy case.

Conservative leader Kemi Badenoch wrote to Sir Keir on Sunday night demanding “openness and honesty” about the fiasco, saying: “It appears you and your ministers are too weak to stand up to Beijing on a crucial national security issue.

“Your Government is now telling its fourth different story about this scandal. This leaves the strong impression that your Government is undermining Britain’s national security because you are too weak to do anything other than appease China.”

Foreign investors own 30 percent of Britain’s debt

Foreign investors are becoming increasingly reliant on Britain’s £3 trillion national debt. Around 30 per cent of Britain’s debt is borrowed from abroad, including from state lenders. This compares with less than a fifth at the turn of the century.

The extent to which China is involved in Britain’s debt remains unclear as the Treasury has not published figures. The United States has taken the opposite approach, publishing a comprehensive list showing China moving away from American debt as Donald Trump escalates trade hostilities.

Last week The Telegraph revealed that the Treasury lobbied to block the publication of a government report into Beijing’s spying earlier this year. Concerns about Beijing’s economic influence were further increased by this statement.

China may manipulate UK, analyst warns

Veteran bond analyst Edward Yardeni, who coined the term “bond vigilantes” for the way debt markets can change the policies of debtor states, warned that China could use its debt ownership to manipulate Britain.

Mr Yardeni said: “The Chinese probably have the capacity to use their ownership of UK bonds to make it clear that they are unhappy with the UK’s policies towards China.”

He highlighted examples where China was accused of lending money to indebted countries to gain control of strategic assets even though they were unable to repay them.

Mr Yardeni said: “Over the past few years, we have seen accusations that the Chinese are using their influence with emerging economies and lending money to buy the ports and mines they helped build.”

Sri Lanka had to hand over the port

He pointed out that Sri Lanka was forced to transfer the controlling share of a major port to China after the country ran out of cash.

“A country becomes more vulnerable when there are fiscal excesses,” he said.

Senior ministers, including Chancellor Rachel Reeves, have been encouraged to take cash from Beijing for Labour’s “growth mission”. Chinese direct investment in British businesses and projects, which stood at £3.7bn by the end of 2023, appears to be recovering after years of tensions and declining investment under the Conservatives.

Beijing seeks approval for exports

Beijing sparked warnings on Thursday when it announced that approval would be required for any company anywhere in the world to export products made using Chinese minerals or battery technology.

Luke de Pulford, chairman of the Inter-Parliamentary Alliance on China, said it was a sign that the Chinese Communist Party aims to “weaponise the dependence of other countries”.

He added: “Despite repeated warnings, the government fell into the trap.”

Ms Kearns said: “If we don’t wake up and get serious, we will be completely dependent on China and subject to the directives of the Chinese trade ministry.”

Borrowing costs hit 27-year high

Britain’s borrowing costs have recently reached a 27-year high, prompting such concerns and putting further pressure on Rachel Reeves as she tries to balance the books ahead of next month’s budget.

The city of London is home to many who are wary of publicly criticizing China after UBS economist Paul Donovan was suspended in 2019 for commenting on swine flu in China. His remarks sparked outrage after a Chinese firm suspended all business with the Swiss lender.

A leading UK-based economist said: “The current fragility of the UK’s fiscal position means the government will be reluctant to do anything that would upset the economic apple cart, even if it means appeasing potentially hostile foreign actors.”

Chinese firm plans £1.5bn wind turbine factory

Plans to build Britain’s largest offshore wind turbine factory in Scotland were unveiled by a Chinese company on Friday in an example of investment at stake in any diplomatic clash with Beijing.

A major boost for Energy Secretary Ed Miliband will be provided by the £1.5bn facility proposed by Ming Yang, which aims to show how Labour’s race to meet net zero targets could pay dividends for workers.

Concerns about the possibility of Chinese firms building wind farms for the UK have previously been voiced by the Ministry of Defence, with it suggested the turbines could be turned into espionage sentries for Beijing and provide an excuse for Chinese engineers to visit the country regularly.

China’s investment in UK companies rises to £90 billion

The Telegraph revealed earlier this year that Chinese investment in Britain’s biggest listed companies had risen to almost £90bn.

Hundreds of millions of pounds worth of shares in UK-listed defense companies are now held by both China’s central bank and its sovereign wealth fund, including BAE Systems, which plays a key role in the UK’s Trident nuclear deterrent, as well as engine manufacturer Rolls-Royce and Babcock, which help maintain Britain’s military tanks.

China’s role in boosting Britain’s struggling finances has been highlighted by Labor, with the Chancellor hailing a £600m deal with Beijing earlier this year as evidence that “pragmatic cooperation” can “boost economic growth”.

Treasury faces spy case

The Treasury now faces fresh scrutiny over its role in the spy case following allegations that officials were “collaborating” with Mr Powell in the weeks before the case collapsed.

Christopher Cash, who worked for Tory MPs, and teacher Christopher Berry were charged with passing intelligence to Beijing after they were arrested in March 2023 before the case was dropped last month.

A source told the Sunday Times: “The accusation was that Jonathan Powell was clearly trying to implement this decision in collaboration with the Treasury.

“The obvious suggestion was that the case should be dropped to appease China, otherwise there would be no further investment from Beijing.”

Powell advised on case but offered no evidence

Education Secretary Bridget Phillipson admitted on Sunday that Mr Powell had advised Downing Street on matters related to the spy case, but insisted he was not involved in discussions about “matter or evidence” before the case collapsed.

The British Government’s criticism of the collapse of the spy case came from Mr Trump’s administration, which is in its own trade war with Beijing.

The White House had warned Sir Keir against allowing a planned Chinese super embassy to be built in London; This also appeared over the weekend.

The decision regarding the Chinese embassy has been postponed again

The long-awaited decision on whether to approve a major new embassy near the Tower of London is set to be announced by the Government.

Ministry of Housing, Communities and Local Government officials are preparing an announcement that the October 21 deadline will be postponed again after several delays due to opposition from critics over security concerns.

The Government was contacted for comment.