Page:ISC-China.pdf/68

CHINA

152. Each of the six pillars then has its own SRO, and these 'pillar SROs' each have their own developed objectives and key outcomes for each pillar.^[1] The pillars feed into the IOP process (discussed later in this chapter). The China SRO explained the flexibility that this system offers:

     So in the IOP process that is under way at the moment *** so we are confident that resource is applied in the right areas given the strategic direction set ***.^[2]

153. We were told that national security runs throughout the China Framework, but there are clearly three pillars which are more relevant—'Trading Safely', 'Countering Security Threats', and 'Digital and Technology'. We have not therefore included a detailed analysis of the other, less relevant, pillars.

 

'Trading Safely'

154. In line with the aims of the Integrated Review, the objective of pillar 1 is to maximise the economic benefits of interacting with China while balancing this with the protection of national security and long-term prosperity. We were told that HMG's priority was to have:

     a more comprehensive approach to our economic security in relation to China, ***. This includes a focus on increasing national economic resilience and reducing dependencies.^[3]

     The six strands under 'Trading Safely' include, but are not limited to, themes such as investment, protection of Intellectual Property, trade, and research and development collaboration.

     ***

155. In September 2020, we were provided with a list of actions planned under this pillar, including the introduction of the (then) National Security and Investment (NSI) Bill and, in order to improve security, additional measures under the Enterprise Act to allow HMG to intervene if a business involved in the response to the pandemic is the target of a takeover, and to lower the scrutiny threshold for mergers in three sectors (artificial intelligence, cryptographic authentication technology and advanced materials).
156. The Committee was also told in 2020 that an economic security framework was being developed, which would allow Ministers to intervene in key areas of the economy on national security grounds under "a clear framework, which can be communicated to business, potential investors and international stakeholders".^[4] At the beginning of this Inquiry, we were told that a new Economic Threats Unit was to be set up to identify, understand and act in cases of concern, replacing the Investment Security Group in the Cabinet Office. In addition to this, a wider set of current tools was being reviewed, including

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1. Written evidence—HMG, 14 September 2020.
2. Oral evidence—HMG, *** October 2020.
3. Written evidence—HMG, 14 September 2020.
4. Written evidence—HMG, 14 September 2020.

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