China hits out at British Steel nationalisation, warning of severe blow to investment confidence

China has accused the UK government of dealing “a severe blow to Chinese companies’ confidence in investing in the UK” after British Steel was taken into public ownership on Thursday. The Chinese commerce ministry said it “firmly opposes and is strongly dissatisfied” with the decision, which it argued “seriously infringed upon Jingye’s legitimate rights and interests”. Jingye, the Chinese company that owned British Steel, had been losing £700,000 a day. The UK government said the nationalisation was essential to protect jobs and safeguard “a vital national capability”. The Department for Business and Trade said the move was needed to maintain steel production at the Scunthorpe site and protect UK supply chains. China’s commerce ministry called on Britain to “faithfully fulfil” its obligations under the 1986 China–UK Bilateral Investment Treaty. “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 said. Beijing said it would “closely follow developments” and support Chinese firms to protect their rights. The nationalisation came after parliament passed legislation allowing the government to bring the steel industry into public ownership where a public interest test was met. The UK government had held negotiations with Jingye but “wasn’t possible to reach an agreement that represented value to the taxpayer”, a spokesperson said, adding: “We highly value our relationship with China and remain open to Chinese investment.” Jingye is seeking compensation. Small Business Minister Blair McDougall told the House of Commons that an independent valuer would be appointed in the autumn “to make a judgment on any compensation that is due, and that could be nil”. The decision threatens to strain relations between London and Beijing just as Andy Burnham is set to enter Downing Street on Monday. The incoming prime minister will have to weigh the approach to the issue against the economic benefits of ties with the world’s second-largest economy.