The Conservative Human Rights Commission demanded a rethink in relations after hearing evidence of abuses from torture to slavery.
It urged the UK to work with allies to respond to China's behaviour.
Foreign Secretary Dominic Raab has said the UK plays a "leading role" in highlighting abuses.
The Commission made the recommendations in a new report endorsed by two former Conservative foreign secretaries, Lord Hague and Sir Malcolm Rifkind.
It adds to growing internal pressure on the government from Conservative circles to harden its line on China.
The Commission says it has heard first-hand evidence of human rights violations in China from dissidents, lawyers, and human rights campaigners.
This included violations of media freedom, clampdowns on Uighur Muslims, modern day slavery, and the establishment of an "Orwellian surveillance state," it added.
The group said this showed the need for a "comprehensive review" of China policy across UK government departments.
It also called for the UK to diversify its supply chains to reduce "strategic dependency" on China and further efforts to highlight rights issues at the United Nations.
Mr Raab announced fines on Tuesday for UK firms doing business in China if they cannot show that their products aren't linked to forced labour in the country's Xinjiang region.
In December, the BBC revealed new evidence that China is forcing hundreds of thousands of Uighurs and other minorities into hard, manual labour in the cotton fields of Xinjiang.
MPs and peers are separately pushing for new laws to block trade deals with countries found guilty of genocide, something which for now the government is resisting.
Mr Raab told MPs the idea was "well-meaning" but it would be wrong to "sub-contract" the issue of when to break off trade talks to the courts.
The Conservative Human Rights Commission, established in 2005, aims to highlight human rights concerns and keep the issue high on the party's agenda.
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January 13, 2021 at 09:03AM
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China: Senior Conservatives call for reset of UK policy - BBC News
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