UK nationalises Chinese-owned British Steel, risking Beijing investment chill

The UK government passed legislation on Thursday to nationalise British Steel, seizing operational control from China’s Jingye Group after the owner moved to shut down the company's blast furnaces. The takeover places the Scunthorpe plant, which employs about 2,700 people, into public hands to secure domestic steel production for major construction and defence projects.

For European industrial policy, the move underscores the continent's hardening stance on retaining strategic manufacturing capabilities. The Scunthorpe site houses the last furnaces in the UK capable of producing "virgin steel" from raw materials, ending a steelmaking legacy spanning more than 130 years. By intervening, London is prioritising supply chain resilience over the established rules of foreign direct investment.

Beijing responded on Friday with a stark warning about the consequences for the broader European investment climate. China’s Ministry of Commerce said it “firmly opposes and is strongly dissatisfied with the British government's decision,” arguing the seizure has damaged Chinese companies’ confidence in investing in the UK.

The ministry disputed the UK's narrative, pointing to the plant’s deteriorating finances before the 2020 takeover. “British Steel had been incurring losses for years before its acquisition by Jingye. Following the acquisition, Jingye injected substantial capital into the company, thereby sustaining its operations and preserving jobs,” the ministry stated. Jingye says it has invested more than £1.2bn (€1.4bn) to maintain operations amid "ongoing production instability".

The dispute raises immediate questions about the enforcement of bilateral investment treaties across Europe. Beijing accused London of weaponising national security to justify the nationalisation and urged the UK to honour the China-UK investment protection agreement. The ministry vowed to closely monitor the situation, support businesses in legal action, and "take resolute measures to firmly safeguard the interests of Chinese enterprises."

The British government has positioned the takeover as an unavoidable step to protect the national interest. “British Steel now belongs to the British people, and our focus is on the future: stabilising the business, backing the communities that rely on it and building a sustainable, competitive and decarbonised steel sector for the years ahead,” Business Secretary Peter Kyle said. An independent evaluation will determine what compensation Jingye receives, though the legislative seizure effectively ends Chinese involvement in the plant.