When Chinese nationals work in the West, he added, "our clients' experience is that they have mixed loyalties."
"We have come across cases where Chinese nationals are working at the heart of British companies' IT security departments with access to entire databases. To my mind, that is a business risk too far," King said.
In Britain, China is said to be focusing on niche products, including security and surveillance systems, and especially dual use equipment -- items that have a civil as well as military use.
But the FBI is also growing anxious about the impact of Chinese spies within the US.
In February the bureau's assistant director of counter-intelligence, David Szady, urged US businesses to help the service stop the theft of business and technology secrets.
Szady cited Russia, Iran, Cuba and North Korea but focused mainly on China, saying there were about 3,000 front Chinese companies in the US.
Security sources say the speed and effectiveness with which the US conducted the 1991 Gulf war was a "wake-up call" for the Chinese.
Szardy said US companies should "partner up" with FBI agents to protect security. But some would always get through, he said.
"Even as we increase our numbers of agents, we can't possibly totally stop it. If you have a little national asset, whatever it is ... they want that little thing that you produce. And they need it to make their missile fly straight or so they can compete in electronic warfare." he said.
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