As a Brit you'll be pleased to know that you don't have to rely on the opinions of just any old Tom, dick or Harry. The British embassy makes it all very clear on their web page as to the initial nationality of the little bundle of joy. The folks there are also more than helpful on such matters so you can always give them a call to check on any other details.

http://ukinchina.fco.gov.uk/en/help-for-british-nationals/Nationality_Advice/

The real problem is if you want to change the nationality of the child further down the road. As I discussed with a couple of other posters the Chinese don't accept dual nationality. There is also a rule, though as with many 'rules' in china it's hard to find exactly where it comes from and how official it really is that states Chinese citizens (which your child would be if you and your mrs. were to have the baby in china) can't relinquish their Chinese nationality until the age of 18. If your wife's hokou area decides to uphold this 'rule' then you are in for a long wait if you wish to go down this path. I have heard of people who have managed the process at an earlier age and often this involves going to Beijing and rattling the right cages up there. Either way it will be a long and potentially fruitless ordeal for you all to go through.

The British government will of course be happy to give mancunian jnr. A UK passport even if he hasn't relinquished his Chinese citizenship because we do believe in the concept of dual nationality. The only problem might occur if the child then tries to re-enter china (having left it to go to England and secure the British passport).

Besides the legal status stuff you have to give very careful consideration to various other things. Including

Age - not to be presumptive but the Chinese generally consider any woman over 35 past her best and the hospitals will have no problem telling you that.

Marriage/previous children - you need to be married in order to get a baby license and if one of you has previously had kids in china you may not be eligible under the one child policy. Without this initial document it'll make it harder to get things like hukou, passport,etc. later on.

Hospitals - they are not nice, they are not clean, they are not helpful. Unless you have a bit of guangxi with someone in the hospital then your wife is likely to be forced to have a c section.
Care - who's going to look after the baby? Is your wife going to be the primary care giver or is she planning on inviting a few of her female relatives into your cosy little house to help raise the baby?

Difference of opinions - the Chinese have some strange ideas about how to care for pregnant women and the resulting child. Most have some basis of logic although compared to western ideas they are generally old fashioned (this will be enhanced if your wife decides to get her mum and aunties involved). What your certain to experience is that everyone in china will seek to give you their opinion on how to raise the child and they will have no problem telling you what in their view you are doing wrong.