The Defence Secretary has said the Government’s “eyes are wide open about China” but said it would be “fantasy” to ignore the Asian powerhouse’s prominence on the world stage.

The Prime Minister’s Integrated Review of security, defence, development and post-Brexit foreign policy published this week called for a “positive trade and investment relationship” with Beijing in the run-up to 2030 despite senior Tories calling for relations to be cooled.

But Ben Wallace said the UK could not “pretend China doesn’t exist” as he defended the policy position.

“As a defence sec, I recognise that threats come from all over the world,” he said on Friday.

“But China exists, China is a global power whether we like it or not and therefore what we’ve said in the review is: our eyes are wide open about China.

“We know they are a huge trading country, we trade with China, we trade with all sorts of countries around the world who don’t have democracies or don’t share the same values as us.

“But we also know that where China does things that we don’t agree with, we call them out – we’ve called them out on Hong Kong and on the treatment of the Uighur and we will continue to call them out on that and work with our friends and allies.

“But the idea that we can pretend China doesn’t exist is just fantasy.”

Mr Wallace, speaking to the PA news agency at Bovington Camp in Dorset, was backed up in his assessment by Chief of the Defence Staff, General Sir Nick Carter.

Sir Nick said that while he saw China as a “chronic challenge”, he thought there was scope to work together on international issues.

“The answer is that China doesn’t have to be an enemy, it doesn’t have to be a threat,” he said.

“Quite clearly its ideology is different to ours and there will be areas where our government will want to call out their ideology, particularly on human rights.

“But there are also going to be areas where we are going to co-operate.

“We’re going to co-operate when it comes to climate change, for example. We are going to co-operate, I suspect, on the rules-based order that is necessary to secure and assure global trade.”

Cabinet minister Mr Wallace also defended the decision to increase the UK’s stockpile of nuclear warheads as part of the Integrated Review.

The Government had previously committed to decreasing the level to a maximum of 180 by the middle of the decade, but now the stockpile could be increased to 260.

The senior Tory said it was “important” Britain ensured its nuclear deterrent remained “credible” following Russia’s decision to “invest in a lot of ballistic missile defence capabilities”.

But he added: “We should also reflect that we are still the smallest stockpile out of any of the major nuclear powers – we’re smaller than France’s nuclear warhead stockpile and I think people should put that in perspective.”

The pair were speaking before the defence command paper is due to be published on Monday, detailing plans for modernising the armed forces.

They were at Bovington Camp to watch the armed forces showcase core equipment capabilities, which are set to be highlighted in the paper next week, according to the Ministry of Defence.

Mr Wallace said the battlefield was “rapidly changing” with technology more widely available to possible enemies, meaning the UK would “need to invest to meet that threat”.

It comes amid reports that the Army could be the big loser as part of the command paper shake-up, with its personnel numbers possibly reduced by 10,000 in the coming years.