MI5 warns UK universities over funding from China's spy-linked institute

The Espionage Alert, published on 30 September, is the first of its kind MI5 has issued on its own, Reuters reported. It names CGTRI, sometimes translated as the China Academy of General Technology, and says its "primary purpose is to fund academic research that directly improves MSS technical capability for espionage."

According to MI5, UK academics have contributed to CGTRI-funded work on AI, cybersecurity, covert communications systems and steganography, the practice of hiding a message inside an ordinary file or object. The alert says many institutions and academics will have worked with the institute in good faith, and in some cases may not have known who was funding the project. It adds that the funding often comes through third parties, making it hard to trace.

Two offences, and a letter to vice-chancellors

The alert points universities at two offences under the National Security Act 2023: section 3, covering assistance to a foreign intelligence service, and section 17, covering obtaining a material benefit from one. Under section 3 it is an offence to act in a way likely to materially assist such a service, where the person knows or ought reasonably to know that this is likely. MI5 advises anyone continuing CGTRI-funded research to take their own legal advice.

Security minister Dan Jarvis said he had written to all UK university vice-chancellors about ending relationships with the institute.

"This alert exposes attempts by Chinese intelligence to covertly benefit from the expertise and research of our academics," Jarvis said.

Universities UK, which represents more than 140 institutions, said it was reviewing the alert, the BBC's Dominic Casciani reported. The Chinese embassy in London rejected the finding outright, saying the accusations were "imaginary and purely fabricated" and that it had lodged "solemn representations" with the UK government.

The warning lands in a week already thick with China-linked security claims. Proofpoint said suspected Chinese hackers had posed as US AI insiders, a US lawmaker has asked five AI firms how they guard model weights from China, and OpenAI said Moonshot-linked users tried to extract its AI reasoning, according to the same report. None of that makes the MI5 alert less unusual: a domestic intelligence service publicly naming a foreign research funder, and naming it to universities rather than to companies, is a different kind of move.

Beijing's other export problem: its own people

The alert also sits awkwardly next to China's own policy on technology leaving the country. New entry-exit rules took effect in the week of 14 September, giving Chinese authorities the power to stop engineers, founders and other specialists from leaving if their expertise in batteries, rare earths or AI is judged a threat to "industrial and technological security," DW reported on 24 September.

Henry Gao, a law professor at Singapore Management University, told DW the curbs "offer a rare glimpse into the true state of China's economy," and suggest Beijing is deeply concerned about capital outflows and about losing skilled people. Bloomberg Intelligence estimated roughly $1 trillion in Chinese wealth left the country last year, the largest hot-money outflow since records began in 2006, DW reported. Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, told DW the $50,000 household foreign-exchange quota has not changed, but the informal routes around it are being squeezed.

She argued the talent block matters more than the capital controls. "You can still move money slowly, with approvals," she told DW. "You cannot easily replace a process engineer who cannot board a plane." Bloomberg reported in May that top AI researchers, founders and executives at firms including Alibaba and DeepSeek now need approval before travelling abroad; The Information reported last year that some DeepSeek staff were asked to hand in their passports. Beijing has neither confirmed nor denied the practice.

Meanwhile, the industrial policy keeps coming

On 28 September, seven Chinese government bodies publicly released the New-Type Battery Industry Development Plan for the 15th Five-Year Plan period, dated 14 September. According to pv magazine, it targets preliminary large-scale application of all-solid-state batteries by 2030, a cycle life of 15,000 cycles for long-life lithium batteries, and defect rates at leading manufacturers down to parts per billion. It sets no capacity or output-value target, and no sodium-ion deployment target, placing sodium-ion inside a broader multi-chemistry portfolio instead.

The document leans harder on governance than on expansion: MIIT said authorities will strengthen capacity early-warning, product-quality supervision and regulation of price competition, and the plan backs consolidation, recycling and more orderly overseas investment. For energy storage, the practical effect is policy cover for longer-life lithium, sodium-ion and flow batteries, with applications widening from conventional grid storage to industrial parks and data centres.

The export machine itself is still running. Geely Auto sold 292,168 vehicles in September, up 6.97% year on year and its highest monthly total this year, according to company data released Thursday and reported by CnEVPost. Exports rose 162.35% year on year to 106,685, but fell 3.10% from August, ending eight consecutive months of record exports. Domestic sales dropped 20.21% year on year to 185,483, the smallest decline since February. New energy vehicles accounted for 65% of the total.

And the software layer is closing ranks. DeepSeek said on its official WeChat channel that it is open-sourcing programming tools for Huawei's Ascend chips, with Huawei's support, according to Reuters, as reported by The Decoder on 30 September. The centrepiece is TileLang, a language developed at Peking University that DeepSeek has used for about a year and now calls its main tool for AGI work, The New York Times reported. The two companies also optimised a 128-chip Ascend 950 supernode.

What ties these threads together is not a single strategy but a direction of travel. Beijing is tightening control over who leaves, what they take and which foreigners get access to the research base, while continuing to fund and export the hardware and software stack underneath. For UK universities, MI5's message is narrower and more immediate: review the collaboration, and take legal advice if it continues.