The UK government is “making up its China policy as it goes along”, leaving Scottish businesses, renewable energy projects, and universities exposed to both missed commercial opportunities and unmanaged security risks, MPs have warned.

In its new 102-page report, China and the UK economy: the case for risk-managed growth, the House of Commons’ Business, Innovation, Science and Trade (BIST) Committee concludes that Ministers have failed to deliver on their 2024 promise of a consistent, long-term strategy towards Beijing. Although a cross-Whitehall “China Audit” was completed in June 2025, it was never published, leaving organisations across the UK to navigate a £140 billion trading relationship without clear rules.

The Committee points directly to the March 2026 “eleventh-hour” block on Chinese firm Ming Yang Smart Energy Group’s £1.5 billion plan to build an offshore wind turbine manufacturing facility at Ardersier Port, near Inverness. Despite months of negotiations that promised thousands of Scottish jobs and a cybersecurity partnership with Octopus Energy, the UK Department for Energy proscribed Ming Yang turbines on unspecified national security grounds.

According to the report, Whitehall failed to explain the legal basis for the veto or properly consult Holyrood, prompting a public row between the UK and Scottish governments. MPs noted concerns that direct outreach by Scottish Ministers to Beijing and Chinese investors had previously cut across Westminster processes or lacked Foreign Office oversight.

To end this disconnect, the Committee recommends establishing a standing “whole-of-UK” organisational structure that brings together central and devolved administrations, supported by “regular security briefings on China, at appropriate levels of classification” for Scottish leaders.

“Britain’s businesses cannot plan for the future when the government keeps making up its China policy as it goes along,” said Rt Hon Liam Byrne MP, chair of the BIST Committee. “Ministers promised clarity and consistency. Instead, we have opportunities missed, risks unmanaged and decisions left until the eleventh hour.”

He added: “Britain must shape its own relationship with China, or risk having that relationship shaped for us in Washington or Beijing.”

For Scotland’s higher education and cultural sectors, the stakes are equally high. Giving evidence to the inquiry, Professor Sir Peter Mathieson, Principal and Vice-Chancellor of the University of Edinburgh, noted that his institution hosts between 9,000 and 10,000 Chinese students. He warned the Committee that without international recruitment – where Chinese students remain the dominant group – universities would face a “real survival problem”.

While universities are keen to tap into trends among young Chinese consumers, research collaboration in STEM subjects faces tightening scrutiny following recent MI5 espionage alerts. However, academic leaders warned MPs that Whitehall’s security apparatus is too slow and England-centric. Both Universities UK International and Professor Mathieson criticised the decision to house the new Academic Interference Reporting Route (AIRR) within the Department for Education, which holds no remit over devolved Scottish higher education. The committee urged the UK government to merge AIRR into the UK-wide Research Collaboration Advice Team (RCAT) to create a “one-stop-shop” for Scottish and UK institutions.

To replace ad-hoc decision-making, the BIST Committee sets out a new blueprint for “risk-managed growth” built around a traffic-light system.

Red Zones: A narrowly defined list of sovereign and allied capabilities – such as critical national infrastructure and sensitive defence technologies – that are strictly off-limits to Chinese trade and investment.

Amber Zones: Sectors where trade and research collaboration are permitted subject to clear risk mitigations, such as strict data traffic controls on connected vehicles and ongoing monitoring under an updated National Security and Investment Act.

Green Zones: Low-risk commercial, cultural, and educational sectors where UK and Scottish firms enjoy competitive advantages and where government should actively back growth through export finance, SME guidance via the Diplomatic Advisory Hub, and diplomatic pressure to lift Chinese market barriers.

The Committee insists that this framework must be backed by “new rules of the game” to counter “China Shock 2.0” – the surge of subsidised Chinese advanced manufacturing exports. MPs call for public procurement rules to be reformed so domestic manufacturers – such as Scottish bus builder Alexander Dennis, which submitted written evidence on the impact of subsidised foreign competitors – are not undercut on public tenders.

The report also recommends a standby tariff regime if Beijing does not offer reciprocal market access.

“We should welcome trade that builds Britain’s strength,” Byrne concluded. “We should stop the trade that puts that strength at risk. That is how we turn engagement into growth, and growth into lasting security.”