Rishi Sunak has said China poses a systemic challenge to UK values and represents the “biggest state-based threat to our economic security”.

The Prime Minister is attending the G20 summit in Bali with fellow leaders of the world’s major economies, including China’s Xi Jinping.

Britain will consider sending arms to help Taiwan to defend itself in the event of an attack from Beijing, Mr Sunak also said.

He told reporters travelling with him to Indonesia: “My view is that China poses a systemic challenge to our values and interests and it represents the biggest state-based threat to our economic security.

“I think that view, by the way, is highly aligned with our allies.”

The Prime Minister said it was “important” the UK defends itself against that, for example through the National Security Investment Act, which allows the Government to block investment in UK companies that might affect the country’s security.

He went on to say: “But I also think that China is an indisputable fact of the global economy and we’re not going to be able to resolve shared global challenges like climate change, or public health, or indeed actually dealing with Russia and Ukraine, without having a dialogue with them.”

Mr Sunak left open the possibility that he could meet Mr Xi, saying ahead of the Bali gathering: “Hopefully I will have a chance to talk to him too.”

Joe Biden held highly-anticipated talks with the Chinese leader on Monday, in which the US president objected to Beijing’s “coercive and increasingly aggressive actions” towards Taiwan.

For Mr Sunak, China’s economic clout means it will be necessary to balance trade benefits with caution over Beijing’s political motivations.

The UK and China are deeply divided over human rights, particularly in Hong Kong, and Beijing’s refusal to publicly condemn Russia’s invasion of Ukraine.

Mr Xi has tightened his grip on power with an unprecedented third term in office, something which could embolden him in taking a more assertive stance towards the West and Taiwan.

Liz Truss in the summer said Western allies should learn the lessons from Ukraine and provide greater support for Taiwan.

Asked if he agreed with his predecessor that the UK should send arms to the self-governing island, Mr Sunak said this would be an option considered in a revamp of the review of foreign and defence policy.

He added: “We’re looking at all of these policies as part of our refresh of the integrated review.

“Our policy on Taiwan is obviously there should be no unilateral change to the status and there should be a peaceful resolution to that situation. We stand ready to support Taiwan as we do in standing up to Chinese aggression.”

Taiwan has been self-governing since nationalist forces fled there in 1949 after the communists took control of China.

It is considered to be a rebel province by China, which claims the island as its territory and opposes any engagement by Taiwanese officials with foreign governments.