UK Government Seeks to Reduce Influence of Chinese Tech, Investments

While the value of Chinese imports stood at over 63 billion pounds in 2021, the U.K. government has been at pains to limit Chinese influence in certain strategic sectors.

Notably, the previous government issued a ban on Huawei-manufactured components being used in the country’s 5G infrastructure and it intends to have removed all such existing hardware from the nation’s 5G networks by 2027.

Read more: New UK Prime Minister Inherits Worsening Crisis, Skyrocketing Energy Bills

The shift away from a dependence on Chinese hardware is part of a larger emphasis on maintaining the sovereignty of the country’s digital economy and a growing recognition of the critical role digital infrastructure plays in national security.

In another instance of the declining influence of Chinese firms in the U.K. tech sector, an ongoing controversy over the fate of the country’s largest silicon chip manufacturer recently took another twist.

After being purchased by Nexperia last year, Newport Wafer Fab, which manufactures silicon semiconductors at a facility in Wales, may end up being returned to its original owner Drew Nelson, who has recently teamed up with the private equity group Palladian Investment Partners to make a bid for the firm.

Newport was acquired by the Dutch firm Nexperia in July last year but has since become the subject of government scrutiny due to Nexperia parent company Wingtech’s ties to China.

The former business secretary, Kwasi Kwarteng, now the Chancellor of the Exchequer, announced in May that he was “calling in” the acquisition of Newport under the National Security and Investment (NSI) Act.

As the first high-profile implementation of the NSI Act, Kwarteng’s decision set the tone for how the new law would be wielded by the government and reflects its defensive stance toward Chinese involvement in certain sectors.

The ongoing discussion over the role of Chinese investors in the U.K.’s digital economy is further complicated by moves from Chinese firms like Tencent to increase their exposure to international tech businesses, including several investments in U.K. FinTechs.

Related: China’s Tencent Takes Stake in UK Challenger Bank Monzo

Also see: Tencent Buys Stake in UK Business Payments FinTech Previse

Having long styled herself as a China hawk and backed by fellow critics including Kwarteng and James Cleverly in two of the U.K.’s most senior political offices, new Prime Minister Liz Truss is unlikely to pursue closer trade ties with Beijing.

Yet with a U.S. trade deal nowhere in sight and relations with the EU highly fraught over her threats to unilaterally revoke the Northern Ireland Protocol, Truss is left with few other options.

Less than a month into her premiership, Truss will need to prove that Britain is still open for business if she is to retain her reputation as a champion of the free market.

For now, she appears to be pinning her hopes on joining the trans-Pacific trading partnership and walking back from her previous position on the EU and its leadership.

While in New York to meet President Joe Biden this week, Truss will also hold a series of bilateral meetings with European Commission President Ursula von der Leyen and French President Emmanuel Macron.

The meeting with Macron will be the first since Truss made comments during the Tory leadership race that the “jury’s out” over whether Macron was “friend or foe.” In what could be read as an attempt to turn a clean slate now she’s prime minister, Truss told reporters on Monday (Sept. 19) that she wanted to have a “constructive” relationship with France.