The UK’s approach to China is “beset by incoherence” and plagued by a lack of senior expertise, according to a report warning of the risks inherent in misjudging the bilateral relationship.

An audit by the Inter-Parliamentary Alliance on China (Ipac), an international grouping of China-sceptic legislators, says past engagement with Beijing has often exposed the UK to the risks of interference without delivering the opportunities promised.

“Successful UK engagement with China must always be framed by an understanding that the PRC (People’s Republic of China) is an inherently hostile authoritarian state that does not share our values,” an underlined sentence in the audit, published on Wednesday, reads.

The inherent power imbalance in the relationship with the world’s second largest economy is “further compounded by muddled policy and weak engagement”, it says.

It cites the example of a visiting Chinese delegation who had noted that no one who engaged with Beijing at a senior level in government was a Mandarin speaker, or had significant experience of living in China.

Although British expertise exists, it is often siloed and “not translated into capability”, Ipac, which counts members from all the UK’s major parties, says.

In an endorsement, the former security minister Tom Tugendhat said the report was “a clear-eyed and realistic take on the defining foreign policy problem of this century, filling a gap left by years of policy neglect”.

While the report accepts that “disengagement was not an option”, it advocates for clearly defined red lines around issues such as critical infrastructure, frontier technologies and human rights.

The document offers several recommendations, including better institutional coordination, the strengthened use of national security tools, and diversification of supply chains.

It identifies emerging technologies such as AI as posing new challenges, in terms of disinformation and surveillance capabilities.

The climate crisis is identified as a low-risk area for cooperation and alignment.

“Climate targets as set will not be met without cooperation with China, and accepting medium-term dependence. This means accepting supply chains tainted by forced labour and unfair trade practices,” the audit says.

The Guardian has contacted the UK government and the Chinese embassy in London for comment.

It was “very welcome” that there was an understanding that better language skills were needed to deal with China, said Kerry Brown, a former diplomat and director of the Lau China Institute at King’s College London.

However, he said, “the critical issue now is lived experience” in China.

“Some of the members of Ipac … are really keen on promoting this very security-oriented idea that going to China is in some ways opening you up to exposure,” he said.

“You can’t teach really important things in a classroom; you can only go and learn them through daily life … and that is the thing that is very difficult to do now, and it’s also the thing that doesn’t seem to be supported.”