China warns UK over British Steel nationalisation, demands fair resolution

China warns UK over British Steel nationalisation, demands fair resolution

The Chinese government has expressed strong dissatisfaction following the United Kingdom's decision to nationalise British Steel, warning that the move deals a severe blow to the confidence of Chinese companies investing in the UK. The UK government announced the takeover of the loss-making company on Thursday, citing national security and the protection of vital supply chains.

China's Ministry of Commerce (Mofcom) and the Ministry of Foreign Affairs both condemned the action. According to Mofcom, the UK government forcibly took control of the company in the name of national security while disregarding the important contributions made by the previous owner, Jingye Group, to British society and the economy.

The Chinese government has called for a mutually acceptable solution and urged Britain to faithfully fulfil its obligations under the China-UK Bilateral Investment Treaty, a legally binding agreement signed in 1986. Beijing stated it will closely monitor developments and support Chinese firms in safeguarding their rights through legal means.

The nationalisation follows a period of instability at the Scunthorpe plant in Lincolnshire. Jingye, one of China's 100 largest companies, purchased British Steel in 2020 for 70 million pounds ($94m) and claims to have invested more than £1.2bn to maintain operations. However, by 2025, Jingye reported losing 700,000 pounds ($942,000) every day. In March 2025, a consultation by Jingye concluded the furnaces were not financially sustainable, and by April, the company had cancelled orders for key materials, prompting fears of a total shutdown.

To prevent the loss of 4,000 jobs and the closure of the blast furnaces, the UK government took operational control of the site in April 2025, though Jingye retained ownership until this week. The full nationalisation was enabled by the Steel Industry (Nationalisation) Act 2026, which received royal assent on Wednesday, allowing ministers to transfer steel assets into public ownership after a public interest test.

Prime Minister Keir Starmer confirmed the move on Thursday, stating that British Steel is a cornerstone of Britain’s industrial strength and that the decision secures the future of steelmaking and protects skilled jobs. The government argues the move is essential because Scunthorpe is the UK's only source of primary steelmaking. If the plant closed, the UK would become the only G7 nation unable to produce virgin steel, which is critical for the building industry and Network Rail.

While the government's long-term strategy involves transitioning to electric arc furnaces (EAFs) to reduce carbon emissions and costs, it intends to keep Scunthorpe operational until alternatives are available. The plant employs approximately 2,700 people directly, supporting thousands more in the wider supply chain.

The financial burden of the nationalisation is significant. The National Audit Office reported in March that the Scunthorpe steelworks was costing the government about £1.3m a day. Business Secretary Peter Kyle stated that the government will cover running costs for the immediate future while a new leadership team works to transform the company into a commercially sustainable, low-carbon enterprise.

The issue of compensation remains a primary point of contention. Jingye has sought compensation for losses and argued the business remains a valuable asset. A UK government spokesperson noted that negotiations with Jingye failed to reach an agreement that represented value to the taxpayer. Small Business Minister Blair McDougall informed the House of Commons on Thursday that an independent valuer will be appointed in the autumn to determine if any compensation is due, noting that the amount could be nil.

This dispute is the latest in a series of geopolitical tensions between the two nations. Previous flashpoints include the 2020 order to remove Huawei equipment from 5G networks and the 2021 removal of China General Nuclear from the Sizewell C nuclear project over security concerns. The current crisis arrives as Andy Burnham is set to enter Downing Street on Monday, as the new prime minister.