Ministers have been warned that China could spy on millions of Brits by using microchips embedded in cars, domestic appliances such as fridges and even lightbulbs.
According to a report sent to the Government by a former diplomat who has advised Parliament on Beijing, the technology poses a "wide-ranging" threat to UK national security.
The report states that small modules gather data and transmit it via the 5G network, which gives the Chinese authorities intelligence and the ability to track people and businesses.
Devices containing the modules include laptops, voice-controlled smart speakers, smart watches, smart energy meters and fridges.
The report, published by the Washington-based consultancy OODA, says the potential threat is much higher than that from Chinese-made components in mobile phone masts which led to a Government ban on Huawei products.
“We are not yet awake to this threat. China has spotted an opportunity to dominate this market, and if it does so it can harvest an awful lot of data as well as making foreign countries dependent on them", Charles Parton, the author of the report told the Telegraph.
Three Chinese companies already have 54 per cent of the global market in the module devices called Cellular IoTs and 75 per cent by connectivity.
If ordered to they have to hand over all data to the Chinese government and worryingly, customers of the three Chinese companies include the computing firms Dell, Lenovo, HP and Intel, and car maker Tesla.
This heightens the concern that Britons with laptops from those brands or with a Tesla car could be spied on.
Among the devices that contain the modules are laptop computers; voice-controlled smart speakers; smart watches; smart energy meters; fridges, light bulbs and other appliances that can be controlled through an app; body-worn police cameras; doorbell cameras and security cameras; bank card payment machines, cars and even hot tubs.
Alicia Kearns, chairwoman of the Commons foreign affairs select committee said to the Telegraph: “You could track someone and work out where the prime minister is going to be, for example, and that would be very useful information for terrorists."
The report suggests that China could monitor the movements of US weapons sales in order to work out if it was selling arms to Taiwan or find the addresses of royal and diplomatic protection officers.
