Beijing has fiercely condemned the British Steel nationalisation, warning that the state takeover undermines Chinese investor confidence and breaches international legal obligations.
The diplomatic backlash follows the UK government’s decision to bring the loss-making Scunthorpe steelworks into public hands to safeguard what ministers termed a “vital national capability”. The facility, though previously placed under operational state control, remained under the ownership of China’s Jingye Group.
China’s commerce ministry declared the intervention “seriously infringed upon Jingye’s legitimate rights and interests and severely undermined the confidence of Chinese companies investing in the UK”.
Beijing has called on London to “faithfully fulfil” its commitments under the 1986 China–UK Bilateral Investment Treaty.
Disregarding Jingye’s significant contribution to the UK economy and society, the British side forcibly took control of the company in the name of national security,” the ministry said.
The timing of the dispute presents an immediate foreign policy challenge for Andy Burnham, who assumes the office of prime minister on Monday.
British Steel Nationalisation: A high-stakes test for China-UK relations
The row threatens to severely strain China-UK relations at a moment of political transition in London. The incoming prime minister faces a delicate balancing act, weighing national security and industrial sovereignty against the economic necessity of maintaining stable ties with the world’s second-largest economy.
By nationalising the firm under new public interest laws passed by Parliament, the UK government secures the freedom to dictate the plant’s future. However, this sovereignty carries a heavy fiscal burden. The taxpayer is now absorbing significant losses to keep the Scunthorpe blast furnaces operational.
The National Audit Office reported in March that the Scunthorpe steelworks was costing the government about £1.3m a day. Business Secretary Peter Kyle confirmed to the BBC that the state would fund these running costs “for the immediate future”.
Sovereignty, compensation, and the G7 steel gap
The financial fallout extends to the question of asset compensation. Jingye, which previously stated the business was losing £700,000 a day, is seeking damages.
Small Business Minister Blair McDougall informed the House of Commons that an independent valuer will be appointed in the autumn “to make a judgment on any compensation that is due, and that could be nil”.
At the heart of the government’s intervention is the preservation of industrial capacity. The Scunthorpe site directly employs 2,700 people and underpins thousands of supply chain jobs. Crucially, the plant produces specialised steel infrastructure required by Network Rail and the construction sector.
Without Scunthorpe’s blast furnaces, the UK would become the sole G7 nation incapable of producing virgin steel. While Whitehall’s long-term strategy shifts toward cleaner, cheaper electric arc furnaces that recycle scrap metal, ministers judged that losing domestic virgin steel production now would leave critical UK infrastructure entirely reliant on imports.
