Taxpayers could end up paying £4billion to fix Government 'mistakes' which allowed Chinese investments in sensitive parts of the economy, a report has found.

The money has had to be spent on the bailout of British Steel and cost of removing Chinese firms from strategic nuclear and communications deals.

The China Strategic Risks Institute, behind the study, slammed 'the mistakes of previous governments who failed to put the economic and national security of the public first'.

The bill is made up of: 

• At least £2billion being spent removing telecoms company Huawei from the UK's 5G mobile phone network rollout
• The £600million cost so far of British Steel's renationalisation
• £100million to buy China Nuclear General out of the Sizewell C nuclear power station project in Suffolk

The bill could rise if the Government has to pay compensation to British Steel's former owner Jingye, which bought the blast furnaces in Scunthorpe under Boris Johnson.

The latest accounts show British Steel owed Jingye £960million at the end of 2024 in the form of inter-company loans.

The institute said Jingye could demand repayment of these loans as part of the ongoing independent assessment of compensation for the state's takeover.

'Far too often the British taxpayer has been asked to pick up the tab for questionable and failed Chinese investments in sensitive parts of the economy,' said the institute's Sam Goodman of the potential £3.7billion bill.

'This could have been spent on improving public services with new schools, hospitals and clearing the backlog of court cases.'

It is a far cry from the cosy Sino-British relationship of a just over decade ago, when prime minister David Cameron took President Xi Jinping for fish and chips and a pint at a pub in his Oxfordshire constituency during a state visit.

Edwina Currie, a minister in the Thatcher government, defended past Tory decisions, saying: 'That's hindsight - never available when you most need it. China has become a lot more aggressive under Xi in recent years and we have adapted to that now.'

Leading economists and Clive Betts MP, deputy chairman of the Public Accounts Committee, say no compensation for British Steel should be given to the Chinese.

The Government said: 'This analysis wrongly suggests we've spent £2billion removing Huawei equipment and confuses commercial decisions and Government action.

'We value our relationship with China and remain open to Chinese investment.

'We'll continue to work together to provide the best opportunities for British business that benefit the taxpayer.

'We cooperate where we can and challenge where we must, engaging on trade where it supports our national interests.'