Beijing protests UK nationalisation of Jingye-owned British Steel
China has formally condemned the UK government’s takeover of British Steel, raising fresh concerns over investment security and bilateral economic ties ahead of a change in British leadership.
The Chinese government has formally condemned the UK’s decision to nationalise British Steel, warning that the move "severely undermined the confidence of Chinese companies investing in the UK". The commerce ministry in Beijing stated it "firmly opposes and is strongly dissatisfied with the British government's decision" regarding the Scunthorpe-based producer, which remains owned by China’s Jingye Group.
Officials argued that London forcibly seized control of the asset under the guise of national security, disregarding Jingye's contributions to the local economy. The ministry called on the UK to "faithfully fulfil" its obligations under the 1986 China-UK Bilateral Investment Treaty.
A UK government spokesperson countered that negotiations with Jingye concluded it "wasn't possible to reach an agreement that represented value to the taxpayer". The government maintains it still highly values its relationship with China and remains open to future investment.
Jingye is actively seeking compensation for the expropriated asset, having previously disclosed that the business was losing £700,000 a day. However, Small Business Minister Blair McDougall indicated that an independent valuer appointed this autumn will determine the payout, noting the final figure "could be nil".
The nationalisation places a significant immediate financial burden on the British state. The National Audit Office estimated in March that the Scunthorpe steelworks was costing the government approximately £1.3m a day, a running cost Business Secretary Peter Kyle acknowledged the state must cover "for the immediate future".
Strategic and market implications
The takeover was enabled by legislation passed on Wednesday, allowing public ownership when a public interest test is met. Keeping the blast furnaces operational is viewed as vital to safeguard 2,700 direct jobs and prevent the UK from becoming the only G7 nation unable to produce virgin steel.
While the government’s long-term decarbonisation strategy favours cheaper, electric arc furnaces that recycle scrap metal, Scunthorpe currently produces specialised steel required by Network Rail and the construction sector. A sudden closure would have forced heavy reliance on imports from the European Union, the US, China, and India.
This dispute threatens to strain economic relations between London and Beijing just as incoming prime minister Andy Burnham prepares to enter Downing Street on Monday. The new administration will be forced to balance the fallout from this expropriation against the broader economic benefits of maintaining ties with the world’s second-largest economy.
