In its report, the Business, Innovation, Science and Trade Committee said successive governments had “failed to reassure” the public they had taken “adequate measures to defend UK national security and economic resilience”.
The MPs said the unpredictability of government approaches and a lack of clear guidance had hindered businesses ability to trade with China.
It proposed setting up “red” and “green” zones to clearly defining where trade and investment would be encouraged and the areas which were “off limits”.
The committee said that the government should insist on fair trade with China and advised preparing tariffs that could be imposed if the country continued to subsidise its industry or failed to offer “fully reciprocal” market access.
On protecting sensitive technology and data, the report said there should be a ban on connected technology devices being used in critical national infrastructure.
The committee said “low-cost” Chinese connected technology had become wide-spread in the UK and that in this area the government had “prioritised diplomatic politeness over the UK’s national security”.
Universities should also get “faster advice” on conducting research with Chinese bodies, it said.
Committee chair, and Labour MP, Liam Byrne said: “Britain’s businesses cannot plan for the future when the government keeps making up its China policy as it goes along.
“Ministers promised clarity and consistency. Instead, we have opportunities missed, risks unmanaged and decisions left until the eleventh hour.
“Britain must shape its own relationship with China, or risk having that relationship shaped for us in Washington or Beijing.”
