As tensions between the UK and China escalate, Beijing has condemned Britain's decision to nationalise British Steel, warning that it will severely undermine confidence in Chinese investment in the country. The move, announced on Thursday, is seen as a key part of Prime Minister-to-be Andy Burnham's plans for industrial renewal, but it has sparked outrage from the Chinese government, which claims its legitimate rights and interests have been infringed upon.
The UK government insists that taking control of British Steel will safeguard thousands of jobs and protect a vital national capability. The move follows legislation passed by Parliament on Wednesday enabling the government to bring the steel industry into public ownership if it meets a public interest test. This marks a significant escalation in state intervention, with the government having already taken control of the Scunthorpe operations last year.
China's Commerce Ministry accused the UK of using national security as a pretext to seize control of British Steel, despite Jingye Group's "significant contribution" to the UK economy and society. The ministry has called on Britain to uphold its obligations under the China-UK Bilateral Investment Treaty and will closely monitor developments to support Chinese firms in protecting their rights.
The nationalisation comes at a precarious time for UK-China relations, with the incoming Prime Minister facing an immediate challenge in navigating this diplomatic tension while balancing the economic benefits of ties with the world's second-largest economy. The significant cost of running the Scunthorpe plant is also a pressing concern, with reports suggesting it costs the government around £1.3 million per day. Business Secretary Peter Kyle has confirmed that the government will cover these running costs for now, but acknowledged that long-term public ownership is unlikely to be viable.
Jingye Group is seeking compensation for the nationalisation and had previously stated that British Steel was incurring daily losses of £700,000. The government's assumption of full control now grants it the power to determine the future of the plant, including the continuation of blast furnace operations, without the constraints of private ownership.