First use of UK law to ban foreign deal marks ‘stark’ trend, warns ex-minister

The UK’s first use of new national security legislation to ban a foreign deal — involving a university’s sale of technology to a Chinese company — is the start of a “stark” trend affecting the higher education sector, a former minister has warned.

“Our universities need to prepare for a geopolitical shock that sees a security grid come down on many more of their activities, including knowledge partnerships with China,” said Jo Johnson, former minister for universities, science and innovation.

“Academia becomes a battle-space when the geopolitics turns sour, and definitions of national security become far more sweeping.”

Business secretary Kwasi Kwarteng announced on Wednesday evening a ban on the sale of computer-vision technology from Manchester university to a Chinese semiconductor company. The decision is the first made under the National Security and Investment (NSI) Act, which has given the government broad powers to halt deals since January.

The legislation is among the most far-reaching in the world, covering 17 sensitive sectors.

Kwarteng said there was “potential that the technology could be used to build defence or technological capabilities which may present national security risk to the United Kingdom”.

As of the end of March, 17 deals had been called in under the new legislation and 14 were still pending a final decision, according to the Department for Business, Energy and Industrial Strategy. The remaining three were cleared.

Although the department has not named most of the entities involved, officials said a considerable number of the transactions relate to China. A retrospective decision on a Chinese subsidiary’s purchase of Newport Wafer, a semiconductor plant in south Wales, is expected in September.

China is the world’s biggest spender on research and development, disbursing $441bn in 2021 at home and abroad, according to government figures. Its international research collaborations have soared in the past decade: China is now the UK’s number two source of co-authors on papers behind the US.

The NSI Act has slowed angel investment in start-ups in Scotland, as well as universities commercialising their research. Oxford University Innovation, which spins out new start-ups from university research, has not created any companies in the second quarter of the year while it “navigate[s] the practicalities” of the new law.

The number of companies it formed in the 12 months to July 2022 halved from the 31 created in the previous 12 months.

British politicians have become increasingly worried about technology collaborations with Chinese companies in recent years. In 2020 the government banned the use of Huawei’s 5G equipment and earlier this month 67 parliamentarians called for a ban on the use of surveillance cameras from two Chinese companies.

The Manchester university ban concerns the sale of SCAMP-5 and SCAMP-7 vision sensing technology. This replaces traditional chips used in image processing with a “vision chip”, which provides higher performance for less energy use, according to a paper by its developers, Jianing Chen, Stephen Carey and Piotr Dudek, all at Manchester university.

Such imaging technology can be used to improve computer vision for autonomous robots, helping them navigate difficult terrain. Its developers described it in a funding proposal as dual-use when applied to robot vision: “Agile micro air-vehicles, and more generally, advanced vision-based navigation systems for autonomous robots will find both civilian and military applications in reconnaissance and search and rescue operations,” the proposal said.

UK government officials said the would-be buyer, Beijing Infinite Vision Technology, was a Chinese commercial fabless semiconductor company with state links.

There is no record of a semiconductor company by the English name “Beijing Infinite Vision Technology” or its close translations in Tianyancha, the Chinese company database.

Manchester university said: “We have thorough internal processes in place to look at proposed international agreements. These were followed in this case and, in line with the legislation, we voluntarily referred this agreement to the UK government.”

Universities UK, which represents 140 higher education institutions said: “International collaboration is critical to the UK’s growth and competitiveness — and universities are committed to working with the new NSI Act in order to ensure this is done safely, securely and in the interests of national security.”