China should not be described as a “foe” or a “threat” but it should be regarded as a “challenge”, a cabinet minister has said – following allegations a Chinese spy infiltrated parliament.

Business Secretary Kemi Badenoch said the claims were an “extremely serious concern” but we “shouldn’t be using language that makes people scared”.

It comes after two men were arrested under the Official Secrets Act amid reports a parliamentary researcher spied for China.

The researcher, who is in his 20s, is understood to have had links to security minister Tom Tugendhat, foreign affairs committee chairwoman Alicia Kearns and other senior Tory MPs.

The incident has thrown a spotlight on the government’s stance towards China.

Prime Minister Rishi Sunak has sought to adopt a more diplomatic stance towards the country than some of the more hawkish members of his cabinet and party, who want China to be officially classified as a threat.

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Asked whether China should be described as a threat, Ms Badenoch told Sky News: “I would define it as a challenge.

“I define China as a challenge because certainly from my job as business secretary working on international trade in particular, we see at international level just how significant China is, impacting the economies of countries all around the world.

“I was at the G20 two weeks ago – there were significant difficulties between China and Japan. There were difficult conversations between China and India. So I think across the world, China is becoming a very, very significant challenge.”

Pressed on whether China should be described as a “friend or a foe”, she replied: “We certainly should not be describing China as a foe – but we can describe it as a challenge.

“I don’t think we should be careless in terms of how we speak about other countries when these sorts of things happen.”

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The business secretary rejected suggestions the government was “putting our safety behind the possibility of trade deals”, saying: “Well first of all, we are certainly not doing any trade deals with China.”

She said the UK’s approach is “the same as our allies in the US, Canada, Australia” and the UK is “not doing anything that’s out of the ordinary”.

“Obviously, Chinese people are different from the Chinese government and it is important to be diplomatic,” she said.

“We shouldn’t be using language that makes people scared. We need to be giving them confidence, and I’m very confident in our security services and in the work that the government is doing on economic security and investment screening.”

Mr Sunak met Chinese premier Li Qiang, who is attending the G20 summit in India in place of President Xi Jinping, on the fringes of the gathering’s final session on Sunday morning, where he said he raised his “very strong concern” about interference with parliamentary democracy which was “obviously unacceptable”.

It was the “right approach” to talk face-to -face with China’s premier, he said.

“Where there are areas of disagreement… I’d rather be in the room directly expressing my concerns, and that’s what I did today.”

The arrests were made in March and first revealed by The Sunday Times. Officers from the Metropolitan Police’s Counter Terrorism Command, which oversees espionage-related offences, are investigating.

Ms Badenoch said it was “significant” the prime minister raised the issue with the Chinese premier this weekend.

“He spoke about his very serious concerns and that’s why it’s important to be able to have the engagement so that you can speak face-to-face and say exactly what it is that we think, in a way that will have an impact,” she added.

The Chinese embassy in London issued a statement yesterday in which it described this incident as “completely fabricated” and “nothing but a malicious slander”. It urged Britain’s lawmakers to “stop anti-China political manipulation”.

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Read more:
How worried should we be about Chinese ‘spying’ in parliament?
James Cleverly defends first China trip by foreign secretary in five years as MPs call for openness on policy

Labour’s shadow home secretary, Yvette Cooper, claimed security services warned about the dangers of spying “some time ago”.

She pointed to the “damning” report from the security and intelligence committee in July which said the government had “no strategy” to deal with China.

“We think there has to be a comprehensive strategy towards the risks, the challenges, and the threats from other states to our national security,” she said.

Asked if she believed China was a friend or foe, she said: “Well, the relationship is clearly complex.

“There are serious issues around the human rights abuses in China. There are serious issues around their approach and their role across the world. And we also have this trading relationship, as we’ve seen the rise of China. We have to deal with that. But in particular, we have to make sure we protect our own national security. That has to come first.”

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