Rishi Sunak was facing pressure to designate China a threat to national security after a parliamentary researcher was arrested on suspicion of spying for Beijing.
The arrest under the Official Secrets Act led to the Prime Minister confronting Chinese premier Li Qiang at the G20 summit in India on Sunday over “unacceptable” interference in democracy.
The researcher, who had links with senior Tories including security minister Tom Tugendhat and Foreign Affairs Committee chair Alicia Kearns, was arrested back in March – but it went undisclosed until Saturday.
Home Secretary Suella Braverman and Mr Tugendhat are pushing for China to be relabelled as a threat to Britain’s safety and interests under new national security laws, the Times reported.
Anyone working “at the direction” of China or a state-linked firm would have to register and disclose their activities or risk jail under the plans.
Representatives for Ms Braverman and Mr Tugendhat have not responded to requests for comment.
Sir Iain Duncan Smith, the former party leader who has been sanctioned by Beijing, was among Tories pressing the Prime Minister to strengthen his language towards China.
He hit out at the “weak” position of not labelling China a threat, telling the PA news agency: “The result is that China is penetrating all our institutions from universities to Parliament.