China has criticised the UK government’s decision to nationalise British Steel, describing the move as a violation of the rights of its Chinese owner, Jingye Group, and warning that it could damage investor confidence in Britain.
In a statement issued on Friday, China’s Ministry of Commerce said it was “firmly opposed” to the decision, arguing that the UK had unfairly taken control of the company under the guise of national security.
The reaction follows Thursday’s announcement by the UK government that British Steel would be brought into public ownership to protect thousands of jobs and preserve the country’s steelmaking capacity.
China said the nationalisation undermined the legitimate interests of Jingye Group, which acquired British Steel in 2020 and has owned the company despite the UK government taking operational control of its Scunthorpe plant last year.
According to China’s commerce ministry, the British government’s action “seriously infringed” on Jingye’s rights and could discourage future Chinese investment in the UK.
Beijing also urged Britain to honour its commitments under the China-UK Bilateral Investment Treaty, signed in 1986 to protect investments between both countries.
The ministry said it would closely monitor developments and support Chinese companies in defending their lawful interests, although it did not specify what measures it might take.
The UK government said nationalising British Steel was necessary to safeguard a strategic industry and protect thousands of jobs linked to the Scunthorpe steelworks.
Parliament approved legislation this week giving the government powers to take steel companies into public ownership where it is deemed to be in the public interest.
The move gives ministers full control over the future of British Steel and allows operations at the company’s remaining blast furnaces to continue.
Business Secretary Peter Kyle said the government would cover the company’s operating costs “for the immediate future.”
Jingye has already begun seeking compensation for the takeover, having previously disclosed that British Steel was losing around £700,000 a day.
However, the UK government has indicated it could reduce or even refuse compensation depending on the circumstances surrounding the nationalisation.
The company has yet to publicly respond to the latest developments.
The dispute threatens to add strain to UK-China relations at a politically sensitive time, with Andy Burnham expected to assume office as Britain’s next prime minister on Monday.
His administration is likely to face the challenge of balancing national security concerns with the economic benefits of maintaining strong commercial ties with China, one of the UK’s largest trading partners.
The government has also made clear that while public ownership is intended to stabilise the business, it does not plan to operate British Steel indefinitely. The Scunthorpe plant is estimated to be costing taxpayers more than £1 million daily, with the National Audit Office previously putting the figure at about £1.3 million a day.
Officials are expected to seek a long-term commercial solution once the business has been stabilised.
