Today’s claim that a Chinese spy in his 20s cruising the Westminster drinks circuit might pose a threat to the British state is absurd. MPs always overstate their role in foreign affairs. Boris Johnson, back in 2017 when he was foreign secretary, might have felt a macho thrill from sending an aircraft carrier to the South China Sea – where it could be sunk in an hour – but Britain’s defences are no more vulnerable to Chinese attack than China’s are to Britain. It is all defence lobby hyperventilation. Linking British interests to those of the outside world is a paranoid legacy of empire. The corridors of the Foreign Office are hung with pictures of the glory days when foreign secretaries would lay down the law of acceptable behaviour to lesser regimes abroad. The UK’s relationship toward China is no different. In the run-up to the Beijing Olympics in 2008, visiting British ministers were told to “raise human rights issues” in any meeting with their opposite numbers – as James Cleverly was tasked to do on a recent visit to Beijing. This they duly did, with a certain embarrassment. The response was always a dignified Chinese nod and smile. A Chinese acquaintance told me they felt sorry for the British for having to be rude their hosts. The calibration of any nation’s response to events beyond its shores has to walk a fine line between promoting universal human rights and pointless grandstanding. The repression of dissenters and treatment of minorities in Tibet and Xinjiang should be condemned, but there are limitations on what western powers can do. It is always possible that China, like Russia and other dictatorships, may be entering a period of instability. Present forecasts are that the Chinese economy may be entering a period of retrenchment. Its property market – long dependent on rapid urbanisation – is collapsing and it labour supply is plummeting. The sense among the west’s more belligerent rightwingers that this should mean Britain should prepare for war, hot or cold, is madness. The most disastrous fallacy of the past quarter-century has been the west’s claim to a post-imperial duty to send its armies overseas to set the world to rights. Who says so? More to the point, wherever it tries it fails. Hundreds of thousands die. This is quite different from how the world should do business with China. The country has lifted 800 million people out of poverty in a generation and boosted its GDP from the billions into the trillions. Yet the widespread assumption that such prosperity would move hand in hand with liberalisation has proved false. China has blatantly used its rise to trading supremacy to ignore accepted norms of international commerce. Though coming late to the sanctions game, under the Trump presidency China began to deploy such weapons against foreign citizens and corporations. Its state institutions have long competed by infiltrating western companies, pirating intellectual property and using unfair trading practices. There is clear evidence of Chinese interference in British universities. Beijing’s “belt and road” policies have been deployed ruthlessly in poorer countries of Africa and Asia, like western nations in the days of 19th-century imperial expansion. Smart diplomacy must separate the wood from the trees. The prime minister, Rishi Sunak, has been right to end the “carping from the sidelines”, merely to show Britain can punch above its weight. He must also be right to de-escalate the Cameron/Osborne love-in of a “golden era” in relations with China. Beijing is not yet in the league of sophisticated trading states. As Covid showed, it retains the corrupt and repressive bureaucracy of a communist regime. When its leaders face opposition from overseas, as they do from their own citizens, they seem to understand only a forceful response. This calls for a careful balance. Britain has no interest in how China chooses its government or how that government rules its people. No more does it have an “interest” in the internal politics of the US or the rest of Europe. But Britain does have an interest in how the world trades with Britain. The UK’s trade with China is worth £93bn a year. This is crucial to the nation’s prosperity and needs to be guarded and promoted. Likewise the whole world has an interest in keeping alive negotiations with China on the climate crisis, irrespective of its internal politics. Beijing’s rulers must know they need to trade with the world as much as the world needs to trade with them. That means they must play by the rules of the game. Enforcing those rules is western diplomacy’s greatest challenge. Simon Jenkins is a Guardian columnist