Boris Johnson signalled he would be "tough" with China as the Government prepared to change extradition arrangements with Hong Kong.
Further measures will be set out on Monday in response to China's imposition of a tough new national security law on Hong Kong amid growing tensions with Beijing.
The Prime Minister confirmed there would be changes in extradition arrangements but promised a balanced approach to relations with Beijing rather than a "knee-jerk" anti-Chinese policy.
The UK is expected to follow the example of the US, Canada and Australia and suspend an extradition treaty with Hong Kong because of the impact of the security law on the territory.
The move risks further infuriating Beijing which was already smarting over the Government's decision last week to exclude the tech giant Huawei from the UK's 5G network – reversing a decision in January allowing it a limited role.
The Prime Minister said: "There is a balance here.
"I'm not going to be pushed into a position of becoming a knee-jerk Sinophobe on every issue, somebody who is automatically anti-China.
"But we do have serious concerns."
Those included the treatment of the Uighur minority and alleged human rights abuses as well as the situation in Hong Kong.
Mr Johnson said Foreign Secretary Dominic Raab would set out "how we are going to change our extradition arrangements to reflect our concerns about what's happening with the security law in Hong Kong".
But the Prime Minister said he would not "completely abandon our policy of engagement" with China.
"You have got to have a calibrated response and we are going to be tough on some things but also going to continue to engage."
Mr Raab has accused the communist regime of committing "gross, egregious human rights abuses" against the country's Uighur population in the north-western Xinjiang province.
The criticism was furthered by the chair of the defence select committee, Tobias Ellwood, who said Britain has "been duped over the last couple of decades" by China.
He told BBC Radio 4's Westminster Hour programme: "I really want to see a reset of our entire foreign policy, bearing in mind that we are sliding towards a cold war, we can't do this on our own, we need to work with our allies.
"We turned a blind eye to what was going on with the Uighur population, we turned a blind eye to the uneven trade situation whereby Chinese companies could operate quite liberally within the UK and elsewhere but our companies couldn't operate within China and now I think it's time to say enough is enough."
The Chinese ambassador to the UK, Liu Xiaoming, said Beijing was still evaluating its response to the Huawei ruling.
There were reports at the weekend that the Chinese social media company TikTok had broken off talks to open a global headquarters in Britain.
The firm faces being banned in the US over security concerns but its head of public policy for Europe, Theo Bertram, told BBC Radio 4's Today programme it was "completely false" to suggest the Chinese state had access to users' information.
In a combative BBC interview on Sunday, Mr Liu denounced Britain for "dancing to the tune" of the US and accused Western countries of trying to foment a "new cold war" with China.
He also rejected the allegations of widespread abuses against the mainly-Muslim Uighur people, accusing "so-called Western intelligence" of making repeated "false allegations" against China.
He suggested video footage, said to be from Xinjiang, showing men, kneeling and blindfolded waiting to be led onto trains by police officers was "fake".
Q: What's the cost of Huawei decision?
A: We are evaluating consequences. This is a very bad decision. It is a dark day for Huawei&China-UK relations, even darker day for UK, because you will miss opportunity to be a leading country in 5G. I happen to agree with Martin Jacques. pic.twitter.com/U1IOrYdsy1
— Liu Xiaoming (@AmbLiuXiaoMing) July 19, 2020
Meanwhile, China is expected to be high on the agenda this week when US secretary of state Mike Pompeo travels to London for talks with senior British figures.
Mr Pompeo flies out on Monday ahead of meetings expected on Tuesday with Boris Johnson and Mr Raab, as well as MPs pressing the Government to take a harder line on China.
The US has warmly welcomed the Government's U-turn on Huawei, which followed intensive lobby by the Trump administration.
Ministers said they had little choice after the intelligence services warned they could no longer be sure Huawei products were secure after the US imposed fresh sanctions on the company.