The move is one of the first times that the security service has issued such a direct and public warning.
MI5's letter comes just months after UK government servers were apparently penetrated by hackers believed to be of Chinese origin.
Several other governments disclosed attacks at around the same time. The US blamed China for a Pentagon hack in September, and France made similar allegations in the same month.
China was believed to have been behind daily internet attacks on Germany in October.
A summary of the MI5 warning has been posted on the Centre for the Protection of National Infrastructure website.
"The contents of the letter highlight the director general's concerns about the possible damage to UK business resulting from electronic attack sponsored by Chinese state organisations, and that the attacks are designed to defeat best-practice IT security systems," the statement reads.
"The letter acknowledges the strong economic and commercial reasons to do business with China, but the need to ensure management of the risks involved."
Experts fear that hacking is increasingly being used to gain the edge in commercial operations by members of the Chinese business community, and the letter warns businesses to take every precaution.
The warning echoes those of private security companies, which have said that government groups around the world are becoming increasingly involved in efforts to launch and defend against web-based attacks.
Reports in The Times suggest that Rolls-Royce and Royal Dutch Shell have already been successfully attacked.
Both companies apparently suffered intrusions, but the most valuable company secrets were reported to have been untouched.
MI5 warns of Chinese hack attacks
By Iain Thomson on Dec 4, 2007 7:21AM