When Britain entered the twenty-first century as one of the world’s most open investment destinations, few imagined that this openness would eventually make the country a primary European gateway for Chinese capital. Yet over two decades China poured an estimated 45 billion pounds into UK businesses and infrastructure, and as new analysis shows, a portion of those investments granted Beijing access to technologies with potential military relevance. At YourDailyAnalysis we view this not only as a financial story, but as a case study in how strategic capital flows reshape technological power.
The surge accelerated after Beijing launched its Made in China 2025 industrial plan, an agenda to dominate ten high-tech sectors from aerospace to robotics. British companies, especially those short on capital and operating in a permissive regulatory environment, became natural targets. It was during this window that several landmark acquisitions occurred, many of which Britain is still untangling.
One of the most consequential was the purchase of Imagination Technologies, a Hertfordshire-based semiconductor designer whose IP underpins graphics architecture used across smartphones and embedded systems. When Canyon Bridge, a fund linked to state-controlled China Reform, acquired the company in 2017, the deal was framed as a commercial rescue after Apple withdrew as Imagination’s largest customer. But within two years, executives faced direct pressure to shift British engineering know-how to China. Former CEO Ron Black told the BBC he was urged to oversee a large-scale transfer of technology and staff, a move that in practice would have exported core semiconductor expertise built over decades. At YourDailyAnalysis we emphasise that such IP, though developed for consumer devices, can be adapted for missiles, drones and other military systems.
At the time, British officials declined to intervene, describing the matter as a private-sector transaction. The decision reflected the political climate of the mid-2010s, when London celebrated a “golden era” of UK–China relations. Today, however, former GCHQ chief Sir Jeremy Fleming concedes that access to strategic technologies was granted “too freely”. In our view at YourDailyAnalysis, this was a systemic failure of investment screening, amplified by China’s far more deliberate and coordinated industrial strategy.
AidData’s research shows that Chinese outbound investment peaked in 2016–2017, after which the US, Germany and Italy began tightening national-security reviews. The UK followed only in 2022, long after critical assets and engineering capacity could have shifted overseas. Britain’s new investment screening regime is more robust, but it cannot undo earlier transfers.
The dilemma has now become sharper. Britain urgently needs foreign capital to reignite growth, especially as borrowing costs rise and domestic investment lags. China remains one of the few players capable of deploying substantial funds at scale. New Chancellor Rachel Reeves has already visited Beijing, prompting concerns among Labour MPs because the government has refused to publish its China risk audit, citing its classified nature.
At YourDailyAnalysis, we see a strategic crossroads. The UK cannot isolate itself from global investment, yet it also cannot afford to repeat past mistakes where core technologies – chips, AI, cyber infrastructure – fell into foreign hands without adequate safeguards. China’s political system, with its ability to plan across decades, has leveraged investment as an instrument of long-term influence. Britain, in contrast, has oscillated between enthusiasm and caution, often reacting only once risks materialise.
Our conclusion is clear: the UK must redefine its approach to economic security. This requires a more rigorous risk-scoring model for foreign investment, mandatory protection of intellectual property, limitations on engineering transfers, and strict boundaries around acquisitions in semiconductors, AI and critical infrastructure.
Otherwise, within the next decade Britain may find that its digital and defence capabilities depend on decisions made far outside Westminster. And as we note at Your Daily Analysis, in an era of technological rivalry, whoever controls the flow of knowledge controls the trajectory of economic power.
