China ‘strongly dissatisfied’ with nationalisation of British Steel

China ‘strongly dissatisfied’ as UK nationalises British Steel

The United Kingdom government has officially brought British Steel into public ownership, a move designed to secure domestic steel production that has drawn sharp condemnation from Beijing. The nationalisation, which took effect this week following the passage of the Steel Industry (Nationalisation) Act 2026, marks the end of a 15-month effort by the UK government to prevent the collapse of the Scunthorpe steelworks.

The transition, confirmed by Prime Minister Keir Starmer on Thursday, follows a period of intense instability. The UK government had previously stepped in during April 2025 to take operational control of the plant after its former owner, the Chinese firm Jingye Group, threatened to abandon the site and shut down its blast furnaces.

Geopolitical Tensions and Official Protests

The Chinese Ministry of Commerce (Mofcom) responded to the nationalisation with a firm statement of opposition, declaring the move a “severe blow” to the confidence of Chinese investors in the UK market. A spokesperson for the ministry stated that the UK government had “forcibly” taken control of the asset while disregarding Jingye’s previous investments in the British economy. Beijing has warned that it will closely monitor the situation and support Chinese companies in pursuing legal avenues to protect their interests. The ministry specifically urged the UK to abide by international rules and the China-UK bilateral investment treaty, calling for fair and impartial treatment of Chinese firms. This development serves as the latest flashpoint in a fluctuating relationship between the two nations.

The Rationale for Public Ownership

The UK government has defended the nationalisation as a necessity for national security and economic resilience. By bringing the company into public hands, the government aims to protect approximately 2,700 jobs at the Scunthorpe site and thousands more within the supply chain. Business Secretary Peter Kyle described the decision as essential to maintaining the UK’s ability to produce virgin steel. Without the Scunthorpe facility, the UK would be the only G7 nation unable to manufacture primary steel, leaving the country heavily reliant on imports. The plant produces specific types of steel currently required by the building industry and Network Rail that are not manufactured elsewhere in the country. However, the financial burden of the takeover remains significant. According to reports from the National Audit Office in March, the Scunthorpe site had been costing the government approximately £1.3m per day.

Next Steps for the Steel Industry

A key component of this transition involves an independent valuation. The government has indicated that while its long-term strategy for the UK steel sector favors electric arc furnaces—which are less carbon-intensive—it intends to keep the Scunthorpe blast furnaces operational until viable alternatives are fully established.

Key Facts Regarding the Nationalisation

Prime Minister Starmer emphasized that the decision was made in the national interest, stating that British Steel represents a vital national capability. As the government assumes full control, it faces the dual challenge of managing the substantial daily operating costs while navigating diplomatic friction with one of the UK’s significant international trading partners.