China Slams UK Steel Nationalisation as 'Serious Infringement'

China's commerce ministry on Friday sharply criticised the UK government's decision to nationalise British Steel, warning it "seriously infringed" on the legitimate rights of Chinese investor Jingye Group and undermined confidence among Chinese companies looking to invest in Britain. The ministry's strong condemnation came a day after the UK officially took the loss-making steelmaker into public ownership, citing the need to protect jobs and preserve a "vital national capability."

Background: A Nationalisation with Chinese Ownership

The UK government had already taken operational control of British Steel's facilities in Scunthorpe last year, but the company remained under the ownership of China's Jingye Group, limiting the government's ability to shape its future. On Thursday, Parliament passed legislation allowing the state to bring the steel industry into public ownership under a public interest test, paving the way for full nationalisation. The government argued that without intervention, the plant—which loses about £700,000 a day according to Jingye—might have faced closure, threatening thousands of jobs and critical steel supply chains.

Beijing's Strong Reaction and Demand for Compensation

In a statement, China's commerce ministry said the UK's move "disregarding Jingye's significant contribution to the UK economy and society" and forcibly taking control of the company under the guise of national security. The ministry called on London to "faithfully fulfil" its obligations under the China–UK Bilateral Investment Treaty. It added that Beijing would monitor the situation closely and support Chinese companies in protecting their rights, though it did not specify what form that support might take. Jingye is already seeking compensation, having previously stated that the business was losing £700,000 per day. The BBC was unable to obtain a response from Jingye to the nationalisation announcement.

Strained Relations and Political Ramifications

The nationalisation threatens to further complicate UK-China ties as Andy Burnham is set to become prime minister on Monday, according to reports. The incoming prime minister will need to balance the economic benefits of maintaining strong relations with the world's second-largest economy against the political fallout from the steel nationalisation. The UK government now has full control over the future of the Scunthorpe plant and is keeping its blast furnaces running, but operating at a heavy cost. The National Audit Office reported in March that the steelworks was costing taxpayers about £1.3 million per day. Business Secretary Peter Kyle told the BBC that the government would cover running costs "for the immediate future," suggesting no quick exit from public ownership.

What Next for British Steel and UK-China Investment?

With the state now at the helm, the UK government faces the challenge of finding a sustainable path for British Steel—either through a sale to a new investor or restructuring. However, Beijing's angry reaction may deter future Chinese investment in the UK, a concern for sectors beyond steel. The commerce ministry's warning that the move "severely undermined" Chinese companies' confidence signals that the diplomatic ripple effects could be long-lasting. As Burnham prepares to take office, his first major test in foreign relations may be navigating the fallout from this nationalisation, while Jingye's pursuit of compensation adds further legal and diplomatic complexity.