Rishi Sunak has warned that China’s plans to “reshape the world order” represent an era-defining challenge for Britain, but risked sparking a row with hawks in his own party by dismissing calls for Beijing to be categorised as a threat. As he flew to a summit designed to shift the balance of power in the Indo-Pacific region, the prime minister signalled a major refreshing of the UK’s national security strategy and uplift in defence spending. The moves are meant to curb the influence of China, which Sunak said was becoming “increasingly authoritarian at home and assertive abroad”, and bolster Britain’s position against Russia after its full-scale invasion of Ukraine. However, the prime minister looks set to defy senior Tories – including his predecessor, Liz Truss – who pushed for China to be reclassified as a threat instead of a “systemic challenge”. Ahead of a meeting with the US president, Joe Biden, and the Australian prime minister, Anthony Albanese, Sunak defended backing away from describing China as “the biggest long-term threat to Britain” during last summer’s Tory leadership race. In comments that risk riling relations with a vocal caucus in the Conservative party of China hawks, the prime minister told reporters as he flew to San Diego: “I don’t think it’s kind of smart or sophisticated foreign policy to reduce our relationship with China – which after all is a country with one and a half billion people, the second biggest economy, and member of the UN security council – to just two words. “That’s why in the integrated review you will see a very thoughtful and detailed approach to China.” Sunak did admit China that was the biggest state-based threat “to our economic security”, and added that it had demonstrated “very different values to ours”. “I think it presents an epoch defining challenge to us and to the global order,” he added. Alicia Kearns, the Tory chair of the Commons foreign affairs committee, told Sunak that the threat from China should “not be seen as primarily economic”. She said: “That is to fail to understand China is foremost seeking to undermine our national security and sovereignty. Because no county can have economic security without national security.” Kearns told the Guardian: “We cannot risk hesitation if we are to outpace the autocrats, and we must be unapologetic for making our nation more resilient to those who seek to undermine us.” Iain Duncan Smith, the former Tory leader and a prominent critic of Beijing, said: “It also looks as though the PM is going to stay with the same ‘project kowtow’-inspired integrated review position on China, calling them a challenge, not a threat. Most of the claims he made on what the government had done were done under another PM. “We look soft to the Chinese … We have become fearful, not feared.” In an acknowledgment that global instability has grown since the integrated review was published in March 2021, Downing Street announced that the updated integrated review would see a fresh cash injection of £5bn and defence spending rise to 2.5% of gross domestic product “in the long term”. Around £3bn of the new money has been committed to the alliance between the UK, US and Australia, known as Aukus. A further £2bn will also be used to replace stockpiles of military kit donated to Ukraine, given fears that depleted supplies mean the UK is less prepared for another war. The figure of 2.5% will disappoint some Tories, who wanted it to rise to 3%. But Ben Wallace, the defence secretary, who previously pushed for an uplift, welcomed the news. He was “delighted with the settlement, especially in these economically challenging times”, according to a spokesperson. Sunak denied that the move was a scaling-back, instead saying it demonstrated the government was “increasing its ambitions when it comes to defence spending” – and adding that it had been welcomed by Nato’s general secretary in a phone call over the weekend. After a meeting between Sunak and Xi was cancelled at the G20, Sunak kept alive the possibility that the pair could meet again. “When it comes to global affairs, you can’t ignore China,” the prime minister told journalists on Sunday. “Given the size of their economy, it is necessary and right to engage with them in order to try and make a difference on things that we care about – whether that is, for example, tackling climate change, global health, macroeconomic stability. That’s what all our allies think.” Despite concerns about Britain’s capacity to keep up support for Ukraine while building its presence in the Indo-Pacific, Sunak stressed it was “absolutely right that we do both”. “As we’ve seen recently, our security is indivisible between these different areas,” he said. Additional measures outlined in the integrated review will include the creation of a new national protective security authority in MI5 to give British businesses and other organisations access to expert security advice. More funding for Mandarin language training and Chinese diplomatic expertise will also be rolled out, with £20m more in funding for the BBC World Service to help it provide 47 language services and counter disinformation by “hostile states”. Sunak said Britain’s national defences would be “fortified” – from economic security to technology supply chains and intelligence expertise. This summer, the UK will lead talks at a Nato summit in Latvia on future sharing of defence resources. Sunak also revealed that Biden will be formally invited to Britain for the 25th anniversary of the Good Friday Agreement when the pair speak on Monday. The PM said there are “lots of great things to celebrate” if Biden wants to make a return visit for Charles’s coronation in May. While Sunak is in California with Joe Biden and Anthony Albanese, Wallace is visiting Japan. The UK foreign secretary, James Cleverly, will update parliament on the integrated review update on Monday afternoon. Labour accused ministers of “failing to secure Britain’s national defence for the future” and exacerbating the squeeze on budgets by crashing the economy and sending inflation “soaring”. John Healy, the shadow defence secretary, said there was nothing substantial to address capability gaps, undermining the UK’s contribution to Nato, and accused the Conservatives of “dragging their feet on the big decisions”.