MI5 has issued a rare public warning to UK universities that China’s intelligence service is using a front company to pay for research by UK academics and steal the secrets of hi-tech projects.

Britain’s domestic security service said researchers and academics should cease work with the China General Technology Research Institute (CGTRI), sometimes also known as the China Academy of General Technology (CAGT).

MI5 believes the body poses a “significant threat” and is now prepared to say publicly that the CGTRI is a front for Chinese intelligence, namely the Chinese ministry of state security (MSS). It said continued collaboration by UK academics could be prosecuted under the National Security Act 2023.

The Chinese organisation has funded 100 or more academics at a string of universities across the UK, in return for access to the research, which it is alleged found its way back to China’s intelligence service.

On Wednesday, the Chinese embassy in London issued a strongly worded rebuttal, describing the accusations as “imaginary and purely fabricated”. A spokesperson said: “We firmly oppose such baseless allegations and have lodged solemn representations with the UK side.

“Exchanges and collaboration between UK universities and China have always been conducted on a voluntary basis and in compliance with laws and regulations. Such exchanges and collaboration are mutually beneficial.”

The MI5 warning sent a shockwave through the UK university sector, with staff reviewing the implications for existing or future partnerships with China, and experts raising concerns about the rigour of the vetting process in sensitive research collaborations.

Areas of research targeted include AI, cybersecurity, covert communications and steganography – the embedding of secret data in seemingly innocuous files. MI5 believes it has clear evidence of sensitive information being passed back to Chinese intelligence, and the Guardian understands that some British-based academics were given honours and awards by the Chinese as well as research money.

Successive British governments have courted Chinese investment and encouraged academic cooperation. Sam Dunning, the director of the UK-China Transparency group, said: “It is reasonably obvious from the internet that CGTRI was focused on areas of high interest to the military and intelligence services.

“Granted, CGTRI used various aliases and have certainly obscured some funding streams, but as for the UK universities or academics who knew they were dealing with CGTRI, open-source research made clear that CGTRI had military or intelligence links.”Vice-chancellors who spoke to the Guardian said they were not aware of receiving any funding from the Chinese institute, but warned that individual academics working on joint projects with other universities or third parties may not know the original sources of funding.

Prof Peter Mathieson, vice-chancellor of the University of Edinburgh and the lead for international security for Universities UK, which represents 142 institutions across the UK, said MI5’s warning meant that future collaborations with the CGTRI would be illegal.

“They are saying that anyone who has a link to this institute up until now has not committed any kind of offence, because it’s not previously been said this was a high risk activity.

“Now that they have said it, we have to sit up and take notice. It’s very much a forward-looking directive.

He added: “I can’t speak for MI5, but I think what they are attempting to say is that people may not realise that the institute they are working with is connected to the security services of the Beijing government. And there’s no reason why anyone should have realised that, because it’s a new piece of information that MI5 has discovered.”

In the alert issued on Wednesday, the Security Service said: “MI5 has identified that the primary purpose of CGTRI is to fund academic research that directly improves MSS technical capability for espionage.”It said that CGTRI had “very strong ties to the … MSS, China’s civilian intelligence and security service”.

The alert continued: “Many academic institutions and individuals will to date have engaged with CGTRI in good faith given CGTRI’s obfuscated links to MSS. “UK academic institutions are strongly advised to immediately review any ongoing or planned collaboration with CGTRI. This is to ensure MSS derives no further benefit from UK universities or research institutions. Further, academics are advised to establish the ultimate funding source when conducting any research collaboration with Chinese institutions, to ensure CGTRI is not involved.”

That MI5 has decided on a public alert as a deterrence strategy, rather than trying to pursue every single case, demonstrates the scale of Chinese state espionage targeting the UK. It hopes universities will heed the warning and immediately cease their work with CGTRI.

The Guardian understands that cutting-edge British research on scraping social media (gathering large amounts of information from social sites and apps) is among the data to which MI5 believes Chinese intelligence gained access.

The security minister, Dan Jarvis, demanded universities end ties to the CGTRI. He said: “This alert exposes attempts by Chinese intelligence to covertly benefit from the expertise and research of our academics, undermining our national security and that of our allies.

“I have written to all university vice-chancellors to ensure they support their staff to end all arrangements with this company, preventing further benefit to the Chinese intelligence services and ensuring compliance with the National Security Act.”Responding to the MI5 alert, Vivienne Stern, the chief executive of Universities UK, said universities took their responsibilities around research security and national security extremely seriously.

“The sector has made significant investments in recent years to strengthen due diligence, risk assessment and research security processes, while continuing to support the international collaboration that is essential to world-leading research and innovation,” she said.

Chinese government filings suggest that CAGT is connected to the China General Technology Group, a major state-owned conglomerate administered directly by the government of China that is also known as Genertec.

The Genertec brand has a UK presence, with a company called Genertec (UK) Ltd, appearing to be owned by the Chinese state.

The British company, which has beened in the UK for a decade and is based in a shared office address on Southwark Bridge Road, had £5.6m in the bank according to accounts to the end of 2024 – cash that seems to have come exclusively from a single property transaction.