Beijing has said Downing Street "abused state power" by blocking the takeover of a microchip factory in Wales.
British Business Secretary Grant Shapps ordered Shanghai-based Wingtech Technology to sell off Newport Wafer Fab, the UK's largest semiconductor producer, on Wednesday.
Wingtech's Dutch subsidiary Nexperia bought an 86 per cent stake in Wafer Fab in July 2021 for a reported sum of around £63 million.
“The UK has overstretched the concept of national security and abused state power to directly interfere in a Chinese company’s normal investment cooperation in Britain,” said Chinese Foreign Ministry spokeswoman Mao Ning.
“This violates the lawful rights and interests of the company concerned and the market economy principles and international trade rules which has long claimed itself to be a champion of,” Mao added.
The Newport plant makes silicon "wafers" which are turned into microprocessor and memory chips at other sites.
Wingtech has vowed to appeal Schapps' decision, which was made after a lengthy review which concluded that there was a risk to national security from the possible use of the factory to make chips used to control 5G telecommunications, electric vehicles and facial recognition systems “and the potential for those activities to undermine UK capabilities.”
Prime Minister Rishi Sunak dubbed China Britain's “biggest long-term threat" in July as he was jockeying for leadership of the ruling Conservative Party. But at the G20 summit on the Indonesian island of Bali this week he softened that rhetoric slightly to call Beijing a “systemic challenge”.