LONDON (AP) 鈥 The British government on Monday resisted calls to label China a threat to the U.K. following the revelation that a researcher in Parliament was arrested earlier this year on suspicion of spying for Beijing. China branded the allegation of espionage a 鈥渕alicious smear.鈥

The arrest has upset British government efforts to ease that have soared in recent years over accusations of economic subterfuge, human rights abuses and Beijing鈥檚 crackdown on civil liberties in the .

U.K. Business Secretary Kemi Badenoch said Britain should avoid calling China a 鈥渇oe鈥 or using language that could 鈥渆scalate鈥 tensions.

鈥淐hina is a country that we do a lot of business with,鈥 Badenoch told Sky News. 鈥淐hina is a country that is significant in terms of world economics. It sits on the U.N. Security Council. We certainly should not be describing China as a foe, but we can describe it as a challenge.鈥

Britain鈥檚 governing Conservatives are divided on how tough a line to take and on how much access Chinese firms should have to the U.K. economy. The government has squeezed China investment out of key sectors such as Britain's nuclear power plants and its 5G mobile phone network. More hawkish Tories want to go farther and declare Beijing a threat, rather than a 鈥渃hallenge,鈥 the word Prime Minister Rishi Sunak prefers.

Under Britain鈥檚 new 好色tv Security Act, if China were officially labeled a threat, anyone working 鈥渁t the direction鈥 of Beijing or for a state-linked firm would have to register and disclose their activities or risk jail.

Sunak鈥檚 spokesman, Max Blain, said it was wrong to reduce the U.K.鈥檚 approach to China 鈥渏ust to one word.鈥

鈥淲e need to take the opportunity to engage with China, not to just shout from the sidelines,鈥 Blain said.

Conservative hawks renewed their calls for a tougher stance after the Metropolitan Police force confirmed over the weekend that a man in his 20s and a man in his 30s were Neither has been charged, and both were released on bail until October pending further inquiries.

The Sunday Times reported that the younger man was a parliamentary researcher who worked with senior Conservative Party lawmakers in a parliamentary group focused on China, and held a pass that allowed full access to the Parliament buildings.

In the House of Commons, former Conservative leader Iain Duncan Smith said it was 鈥渁ppalling news鈥 that a Chinese spy cell might be operating at the heart of British politics. Ex-Prime Minister Liz Truss, another China hawk, urged the government 鈥渢o recognize that China is the largest threat both to the world and to the United Kingdom for freedom and democracy.鈥

The arrested researcher, whom police have not publicly named, maintained in a statement released by his lawyers Monday that he is 鈥渃ompletely innocent."

鈥淚 have spent my career to date trying to educate others about the challenge and threats presented by the Chinese Communist Party," the researcher said in the statement. 鈥淭o do what has been claimed against me in extravagant news reporting would be against everything I stand for.鈥

Chinese Foreign Ministry spokesperson Mao Ning said 鈥渢he so-called Chinese espionage activity in the U.K. is non-existent. We urge the British side to stop spreading false information and stop its anti-China political manipulation and malicious smear.鈥

Sunak chided Chinese Premier Li Qiang over the alleged espionage when the two met at a in India on Sunday. Sunak said he鈥檇 expressed 鈥渕y very strong concerns about any interference in our parliamentary democracy, which is obviously unacceptable.鈥

Sunak and Li met days after Foreign Secretary James Cleverly visited Beijing, the highest-level trip by a British politician to China for five years.

As the British government tries to strike a delicate diplomatic balance, U.K. spy services have sounded ever-louder warnings about Beijing鈥檚 covert activities. In November, the head of the , Ken McCallum, said 鈥渢he activities of the Chinese Communist Party pose the most game-changing strategic challenge to the U.K.鈥 Foreign intelligence chief said in July that China was his agency鈥檚 鈥渟ingle most important strategic focus.鈥

In January 2022, MI5 issued , saying a London-based lawyer was trying to 鈥渃overtly interfere in U.K. politics鈥 on behalf of the Chinese Communist Party. The agency alleged attorney Christine Lee was acting in coordination with the Chinese ruling party鈥檚 United Front Work Department, an organization known to exert Chinese influence abroad.

Alex Younger, a former head of MI6, said the U.K.'s relationship with China is complicated.

鈥淲e鈥檝e got to find ways of engaging with it, and find ways of cooperating with it in important areas like climate change, and sometimes we have to be absolutely prepared to confront it when we believe that our security interests are threatened,鈥 Younger told the BBC.

___ Associated Press writers Sylvia Hui in London and Ken Moritsugu in Beijing contributed.

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