Debate on the threats posed by China

On the last day of Parliament 2024 we had a debate regarding the threats posed by China. Although nearer the time a third party posted a video of my speech, here is the text.

We have already heard important speeches on human rights, and I am sure that we will hear more. As the noble Lord, Lord Alton, intimated, I want to change gear. I want to discuss the issue of technology and the threat of Chinese technology to our security. I will use the specific to illustrate the general.

My first specific is lidar: light detection and ranging technology. It is used for mapping and sensing in autonomous vehicles, drones, trains and airports; and utility providers and infrastructure operators use lidar to monitor pipelines, power lines and rail networks. As your Lordships will understand, these are all important areas. In 2020, Chinese firms had a 58% share of the global automotive lidar market. I do not have later stats, but I expect that the share will now have risen due to the copious use of subsidies, market protections, procurement preference and the systematic acquisition of foreign intellectual property. Chinese lidar poses a danger because it collects sensitive data and can receive over-the-air updates enabling potentially undetectable changes to systems, which could compromise operation.

Next, we have cellular IoT—internet of things—modules. These are what connect everything to the internet. They are used in a vast array of critical infrastructure applications: energy, logistics, manufacturing, transport, health, and security, to name but some. They remotely monitor and control complex systems and collect vast amounts of data and metadata for analysis, processing and response management. Chinese pricing is often up to 25% below manufacturing cost, helping China to gain a 70% share of the world market—already. Quite apart from the leverage that can be applied via this dominant position, China has potential access to very large amounts of data and can remotely interfere with devices, switching off or degrading critical national infrastructure.

Domination of key markets is a Chinese strategy across many technologies. Photovoltaics is one example, and China’s share of all manufacturing stages for solar panels exceeds 80%. Once again, this has happened by the use of very low price levels that are supported by subsidy, with China having crushed most of its international opposition.

Lithium-ion batteries are another example. China dominates the whole battery supply chain, producing well over 80% of all key components. Graphite, copper, nickel and cobalt are the raw materials needed for batteries and their use will rise staggeringly. For example, by 2040, estimates point to a ninefold increase in lithium requirements above current use. While US and European companies play significant roles in some areas of lithium and copper asset ownership, China invested $10 billion in overseas mining in the first half of 2023 alone. China dominates nickel and cobalt production, notably in Indonesia and Congo, and it controls 93% of battery-grade graphite refining.

Rare earth minerals, vital for manufacturing not just batteries but wind turbines, phone displays and fibre-optic cables, will see a surge in demand. Again, China dominates refining and production, and is expected to increase its share above the current 80%. In AI and quantum computing, the Chinese effort is currently somewhat behind that of the US and the West, but we have already seen that if China decides to move forward, it moves forward at pace. Chips are key to this and China continues to grow its domestic chip industry: a $47.5 billion investment fund was announced this year, and the West has been slow to respond. Delays applying sanctions allowed China to buy time and stockpile, while an increase in its chip purchases now indicates that it is still stockpiling for future problems.

Meanwhile, quantum computing has the potential to completely change the way our computers and devices work, and poses significant security risks. At the moment, China and the US lead, but China is certainly further ahead in moves to try to deploy this technology, with infrastructure and two satellites with quantum communication capability.

Thanks to the tireless work of some of the people speaking in this debate, the last Government began to wake up to the dangers. In October 2022, work started on removing Huawei from UK telecoms infrastructure, but this is due to be completed only in 2027. And there have been partial moves regarding Hikvision’s surveillance cameras, but not even scratching the surface of this problem. Where is our co-ordinated approach to this? The pattern in the UK is piecemeal, slow and, I would say, largely ineffective.

To conclude, this is not paranoia: the danger is there and the Government need to be honest in their audit. China has a predatory pricing strategy based on massive subsidies, and sometimes slave labour, designed to eliminate its western rivals. It has acquired global dominance in key raw materials and their processing. It has launched programmes to gather IP from across the world by any means, as we heard from the noble and learned Lord, Lord Garnier. Perhaps most worryingly, it has established deep penetration of our critical infrastructure and key equipment, with the capacity for detailed covert surveillance and remote control. This is not the half of it as we heard fro Baroness Lawlor.

It is clear to all who look that China’s technology strategy is a serious threat to our security and an existential threat to our capacity to deliver manufacturing when we need it. I ask the Minister to confirm that she too recognises this threat and that the audit will take this on board.