China Hits Out at UK Over British Steel Nationalisation

China’s Ministry of Commerce has expressed “resolute opposition and strong dissatisfaction” with the UK government’s decision to nationalise British Steel, the country’s last remaining primary steelmaking facility, warning that the move severely damages Chinese companies’ confidence in investing in the UK. The statement, issued on July 17, came a day after the UK government passed legislation to bring the Scunthorpe-based steelworks, owned by China’s Jingye Group since 2020, into full public ownership.

A Crisis Years in the Making

The nationalisation marks the culmination of a prolonged crisis that began when Jingye, one of China’s 100 largest companies, acquired British Steel out of insolvency for £70 million ($94 million) in March 2020. According to Al Jazeera, Jingye claims to have invested over £1.2 billion ($1.6 billion) to keep the plant running. However, by 2025, the company reported losing £700,000 ($942,000) per day operating the facility.

In March 2025, Jingye carried out a consultation concluding that the blast furnaces were not financially sustainable. The following month, it cancelled orders for key steelmaking materials, stoking fears of an imminent shutdown. The UK government responded by seizing operational control of British Steel in April 2025 under the Steel Industry (Special Measures) Act, though Jingye retained legal ownership.

The Road to Nationalisation

Since taking operational control, the UK government has spent at least £419 million ($570 million) on working capital, raw materials, and staff salaries. The BBC reports that the National Audit Office revealed in March 2026 that the government was spending approximately £1.3 million ($1.77 million) per day to keep Scunthorpe running.

Prime Minister Keir Starmer announced the nationalisation plan on May 11, 2026, declaring: “Steel is the ultimate sovereign capability. Strong nations in a world like this need to make steel.” The legislation was fast-tracked through Parliament, receiving Royal Assent on July 15, with ownership officially transferring to the state on July 16.

Beijing’s Furious Response

In a strongly worded statement, China’s Ministry of Commerce accused the UK of acting in bad faith. “The British side disregarded Jingye’s significant contributions to the UK economy and society, forcibly took over the company in the name of national security, and nationalised British Steel, severely damaging Jingye’s legitimate rights and interests,” the ministry said, as reported by Xinhua News Agency.

The ministry also warned that the move “severely undermines Chinese companies’ confidence in investing in the UK” and urged the British government to fulfil its obligations under the China-UK Bilateral Investment Treaty, a legally binding agreement signed in 1986 designed to protect investments between the two countries.

China said it would “closely monitor developments, support Chinese companies in using legal means to protect their rights, and take forceful measures to firmly safeguard Chinese enterprises’ interests,” though it did not specify what those measures might entail.

Strategic Stakes at Scunthorpe

The Scunthorpe plant operates the UK’s last two blast furnaces capable of producing “virgin steel” from raw iron ore. According to Euronews, without this capability, the UK would become the only G7 nation unable to produce primary steel. The historic furnaces — “Queen Bess” (operating since 1938) and “Queen Anne” (since 1954) — are designed to run continuously; cooling them could cause severe damage requiring costly repairs.

British Steel directly employs approximately 2,700 people at Scunthorpe, supporting thousands more in the supply chain. Business Secretary Peter Kyle said the nationalisation was necessary to prevent the company from going under: “If that company disappeared, we would lose our ability to produce primary steel in this country and would be completely reliant on global supply.”

Compensation Dispute Looms

A major point of contention is compensation. Jingye is reportedly seeking over £1 billion ($1.36 billion), while the UK government’s offer was reportedly worth tens of millions of pounds. Small Business Minister Blair McDougall told Parliament that an independent valuer would be appointed in the autumn to determine whether any compensation is payable, adding that it “could be nil.” Reports indicate Jingye has launched formal legal proceedings against the UK government.

Broader Implications for UK-China Relations

The nationalisation comes at a politically sensitive moment, with incoming Prime Minister Andy Burnham set to take office on July 20, 2026. The episode adds to a growing list of tensions between London and Beijing, including the UK government’s blocking of Chinese company Mingyang’s port development plans in Scotland and MI5 warnings about Chinese espionage.

As OREACO notes, the UK had been spending £1.3 million per day on an asset it did not legally control — a nuance that underscores the extraordinary nature of the intervention. The case may influence how other Western economies approach foreign ownership of critical infrastructure, particularly Chinese-owned strategic assets.

What’s Next

The incoming Burnham government will need to balance its stance on the nationalisation with maintaining economic ties with China, the world’s second-largest economy. The long-term plan for British Steel remains unclear, though the government has indicated nationalisation is a transitional arrangement. Trade unions have cautiously welcomed the move as a job-saving measure, with Unite General Secretary Sharon Graham calling it “the first step in a journey to transform our steel industry.”

Meanwhile, China has warned it will take “forceful measures” to protect its interests — a threat that could have significant consequences for bilateral trade and investment flows between the two countries.