Rishi Sunak is under pressure to toughen up his approach to China after a spy scandal was uncovered at the heart of British democracy.
The Prime Minister confronted Chinese premier Li Qiang after it emerged a parliamentary researcher had been arrested on suspicion of spying for Beijing.
Mr Sunak said he raised “very strong concerns” about the infiltration during talks on the sidelines of the G20 summit.
But Tory MPs said Mr Sunak has “watered down” down his language on China since he became Prime Minister.
Former leader Sir Iain Duncan Smith warned that despite China infiltrating “many” UK institutions, including universities, the “government refuses to refer to them as a threat”.
He added: “As a result, China sees us now as the soft underbelly of the Nato alliance.
“Our policy seems to entail not upsetting China. Yet this spying arrest is a slap in the face of the UK’s weak policy on China.”
He added: “The reality of a Chinese spy in Parliament is a moment to think again about our policy.”
Police swooped on a researcher who has had links to several senior Tory MPs, including security minister Tom Tugendhat and foreign affairs committee chairwoman Alicia Kearns. The Briton was arrested along with another man by officers on March 13 on suspicion of spying for Beijing.
Mr Sunak spoke with the Chinese Prime Minister for 20 minutes at the summit in New Delhi and tackled the spy scandal at the start of the meeting.
It is understood he vented serious concerns about Beijing’s attempts to interfere with British democracy.
Talking through interpreters, Mr Sunak said he wanted a constructive and pragmatic relationship but Britain has concerns about China’s activities.
Premier Li, who attended the summit in place of President Xi Jinping, told him they obviously have “differences in opinion”.
The talks were only nailed down at the last minute but Mr Sunak was said to be determined to see the Chinese face to face to raise his concerns after the story broke.
Mr Sunak pointed to his confrontation with Mr Li as an example of the benefits of his policy of engagement rather than “carping from the sidelines”.
He said: “I think our approach is completely aligned with that of our allies. If you look at how countries like America, Japan, Canada all engage with China, that’s what they do, because engaging with people allows you to raise concerns directly.
“I think that’s a more powerful thing to do. Where there are areas of disagreement or areas of concern that we have, I’d rather be in the room talking to the Chinese directly about those, face to face.
“I think that’s the right approach. There’s no point carping from the sidelines, I’d rather be in there directly expressing my concerns, and that’s what I did today.”
Mr Sunak has riled some of the more hawkish Tories, including his predecessor in No 10, Liz Truss, for describing China as a “challenge” rather than a threat.
Tobias Ellwood, the Tory MP who chairs the Commons Defence Committee, warned the incident is “potentially part of a wider, long-term, Chinese strategy to infiltrate Parliament”.
Mr Tugendhat is said not to have had any contact with the researcher since before he became security minister in September last year.
Ms Kearns declined to comment, adding: “While I recognise the public interest, we all have a duty to ensure any work of the authorities is not jeopardised.”
A report from Parliament’s spy agency watchdog, the Intelligence and Security Committee, warned in July that Beijing is targeting the UK “prolifically and aggressively”.
Last year, MI5 issued a rare security alert, warning MPs that a suspected Chinese spy called Christine Lee had engaged in “political interference activities” on behalf of China’s ruling communist regime.
Labour MP Barry Gardiner, the former chairman of the now disbanded Chinese in Britain APPG, received more than £500,000 in donations from her before the warning.
Downing Street and the House of Commons both declined to comment, citing their policies on security matters.
