China criticizes UK government over nationalisation of British Steel
The UK government has finalized the transfer of the Scunthorpe steelworks from China's Jingye to public control to protect jobs and national security. Beijing has condemned the takeover as a violation of bilateral investment treaties and threatened legal action.
The UK government’s decision to nationalize British Steel has drawn strong criticism from China, which accused the country of undermining investor confidence and disregarding the contributions of its companies. The move, finalized on Thursday, transferred ownership of the Scunthorpe steelworks from the Chinese firm Jingye to public control, marking a significant escalation in tensions between the two nations over foreign investment and industrial policy.
The Department for Business and Trade announced the nationalization as a necessary step to secure the future of steel production in the UK, citing the need to protect jobs, supply chains, and national security. The company, which had been owned by Jingye since 2020, had faced repeated financial losses, with the Chinese group reportedly losing £700,000 daily by 2025. In March 2025, Jingye had initiated a consultation on the sustainability of the Scunthorpe blast furnaces, leading to fears of closure. The UK government intervened, taking operational control of the plant in April 2025, though ownership remained with Jingye until Thursday’s formal transfer.
China’s Ministry of Commerce (Mofcom) condemned the decision, stating it “seriously undermined” the confidence of Chinese companies in investing in the UK. A spokesperson for Mofcom accused the UK of “forcibly taking control” of British Steel under the guise of national security, disregarding Jingye’s contributions to the British economy. The statement emphasized that the UK had failed to uphold its obligations under the China-UK bilateral investment treaty, which was signed in 1986. China pledged to support Jingye in pursuing legal avenues to protect its rights, though it did not specify the nature of potential measures.
The UK government defended the move as essential to maintaining the country’s industrial capacity. Prime Minister Sir Keir Starmer described British Steel as “a cornerstone of Britain’s industrial strength,” highlighting the plant’s role in producing critical steel for infrastructure and defense. The Steel Industry (Nationalisation) Act 2026, which received royal assent in June 2026, granted ministers the authority to transfer steel businesses into public ownership when deemed in the national interest. The legislation followed months of political debate, with critics warning of the financial burden on taxpayers and the risks of state intervention in a loss-making industry.
Jingye has argued that the Scunthorpe plant remains a valuable asset, despite its financial struggles. The company has reportedly sought compensation for the expropriation, with the UK government now appointing an independent valuer to assess the case. However, the government has emphasized that no deal could be reached with Jingye that balanced the company’s interests with those of taxpayers. The nationalization has also sparked concerns among opposition parties, with the Conservatives warning of a “blank cheque” for public spending and urging a more sustainable approach to the plant’s future.
The dispute underscores broader tensions in UK-China relations, particularly as the incoming Labour government, led by Andy Burnham, prepares to take office. The nationalization risks complicating efforts to maintain economic ties with China, a key trading partner. Meanwhile, the UK’s steel sector faces its own challenges, including the need to modernize aging facilities and transition to low-carbon production. Business Secretary Peter Kyle has stated that the long-term future of the Scunthorpe blast furnaces will depend on decisions made by the government and the industry, though the immediate focus remains on stabilizing the business and ensuring its survival.
The nationalization of British Steel has reignited debates about the role of state intervention in the economy, the protection of foreign investments, and the strategic importance of domestic industries. As the UK navigates these issues, the fallout from the move is likely to have lasting implications for both its industrial policy and its diplomatic relations. For now, the transfer of ownership marks a pivotal moment in the ongoing struggle to balance economic priorities, national interests, and the demands of a globalized market.
