By Andrew MacAskill and Kylie MacLellan
LONDON (Reuters) -Chinese spies are targeting British officials in sensitive positions in politics, defence and business as part of an increasingly sophisticated spying operation to gain access to secrets, the British government said on Thursday.
The government, responding to a parliamentary report in July that found the government's approach to the threat posed by China was inadequate, highlighted the "prolific" scale of Chinese espionage.
"Chinese recruitment schemes have tried to headhunt British and allied nationals in key positions and with sensitive knowledge and experience," the government said.
There has been growing anxiety about Chinese activity in Britain, exacerbated since it was revealed at the weekend that a parliamentary researcher was arrested in March on suspicion of spying for China.
The arrest of the young researcher, who denied being a spy, has led to calls by British members of parliament for a tougher stance. The Chinese foreign ministry called the spying claims "entirely groundless".
'CAN DO BETTER'
In its highly critical report, the Intelligence and Security Committee said Beijing had successfully penetrated every sector of the British economy and ministers had been too slow to deal with the threat.
China is involved in a "whole state" assault on Britain and the government's approach has been "completely inadequate" and dominated by short-term economic interests, the committee concluded after a four-year inquiry.
Sunak told parliament that he accepted the report and recognised that it identified areas where "we can do better".
Britain's domestic intelligence service MI5 has said it is now running seven times as many investigations into Chinese activity as it did in 2018 and plans more. The government has set up a unit to protect elections from foreign interference.
Last year, MI5 issued a rare security alert, warning members of parliament that a suspected Chinese spy was "involved in political interference activities" in Britain.
There was also a newspaper report this week that MI5 had warned the ruling party that two potential candidates to become lawmakers were Chinese spies.
The government said it regularly vets officials and has set up software to help identify fake profiles on social media.
More than 25,000 people used a "Think Before You Link" app, launched last year, to report approaches from people suspected of using fake profiles, including Chinese intelligence services, the government said.
(Reporting by Andrew MacAskill, Kylie MacLellan and Muvija M; editing by Michael Holden and Christina Fincher)