China has launched a blistering attack on the nationalisation of British Steel, warning the move "seriously infringed" on the rights of its owner Jingye Group and "severely undermined" the confidence of Chinese firms investing in the UK.
The UK government announced on Thursday it was taking the loss-making steelmaker into public hands to protect jobs and safeguard a "vital national capability". The move came after Parliament passed legislation on Wednesday allowing nationalisation under a public interest test. The UK had already taken control of operations in Scunthorpe last year, but Jingye remained the owner, limiting the government's ability to steer its future.
“China condemns British Steel nationalisation as infringement, threatening ties as Andy Burnham prepares to become PM.”
"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," China's commerce ministry said in a statement. It called on Britain to "faithfully fulfil" its obligations under the 1986 China–UK Bilateral Investment Treaty.
The decision threatens to strain relations just as incoming Prime Minister Andy Burnham is set to enter Downing Street on Monday. Burnham will have to weigh his approach against the economic benefits of ties with the world's second-largest economy.
A UK government spokesperson said negotiations with Jingye had been held 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."
Jingye is seeking compensation, having said the business was losing £700,000 a day. Small Business Minister Blair McDougall told the House of Commons that the government will appoint an independent valuer in the autumn "to make a judgment on any compensation that is due, and that could be nil."
The BBC has been unable to get a response from Jingye to Thursday's announcement. Beijing said it would support Chinese firms to protect their rights but did not specify how.
