China has launched a blistering attack on the UK government's nationalisation of British Steel, warning that the move “seriously infringed upon Jingye's legitimate rights and interests” and will “severely undermine the confidence of Chinese companies investing in the UK”.
The commerce ministry in Beijing said on Friday that it “firmly opposes and is strongly dissatisfied” with the decision, which came after Parliament passed emergency legislation on Wednesday allowing the government to seize the loss-making steelmaker. The UK took control of British Steel's operations in Scunthorpe last year but the company remained owned by China's Jingye Group, limiting ministers' ability to steer its future. On Thursday, the government announced it was taking the firm fully into public hands, saying the move would protect jobs and safeguard a “vital national capability”.
“China condemns UK nationalisation of British Steel, warning it undermines investor confidence as Burnham enters No 10.”
Jingye, which had previously said the business was losing £700,000 a day, is now seeking compensation. But the small business minister, Blair McDougall, told the House of Commons that an independent valuer will be appointed in the autumn “to make a judgment on any compensation that is due, and that could be nil”. The Chinese government called on Britain to “faithfully fulfil” its obligations under the China–UK Bilateral Investment Treaty, a legally binding agreement signed in 1986 designed to promote and protect investments between the two countries.
In a statement, the Chinese commerce ministry accused the UK of acting in bad faith: “Disregarding Jingye's significant contribution to the UK economy and society, the British side forcibly took control of the company in the name of national security.” The ministry added that Beijing will monitor developments closely and support Chinese firms to protect their rights, though it did not specify what that might involve.
The nationalisation threatens to strain relations between London and Beijing just as Andy Burnham prepares to enter Downing Street on Monday. The incoming prime minister will have to weigh his approach against the economic benefits of ties with the world's second-largest economy. A UK government spokesperson said on Friday that negotiations had been held with Jingye but “it wasn't possible to reach an agreement that represented value to the taxpayer”. The spokesperson added: “We highly value our relationship with China and remain open to Chinese investment.”
