China Warns Britain Over British Steel Nationalisation, Threatens Retaliatory Measures
China’s Ministry of Commerce on Thursday warned the British government to proceed carefully with plans to nationalise British Steel, threatening to take unspecified retaliatory action if Beijing judges the rights of Chinese investors to have been violated. The Ministry said Chinas investors rights must be protected.
The warning came three days after Prime Minister Sir Keir Starmer announced on Monday that the government would introduce legislation this week giving it powers to take British Steel into full public ownership — a move that would end Chinese company Jingye Group’s control of the Scunthorpe steelworks for the first time since 2020. This means British Steel will be publicly owned.
Beijing urged Britain to “make decisions prudently” and called on the British government to “respect the wishes of firms and market principles, and avoid the abuse of administrative coercive measures,” according to Reuters. Yahoo!
China’s Ministry of Commerce said in a statement that “whatever actions the British government takes, it should fully consider the substantial investment made by the Chinese enterprise and its contributions to the UK economy and society.” The ministry added that China would “take strong measures to safeguard legitimate rights of Chinese companies” and would closely follow further developments. MarketScreenerYahoo!
The ministry urged the UK to safeguard the legitimate rights and interests of Jingye and to seek a fair, mutually acceptable solution through consultation. The British government did not immediately respond to a request for comment, Reuters reported. MarketScreener
Starmer Announces Full Nationalisation Push
Sir Keir Starmer announced that legislation would be brought forward to take “full national ownership” of British Steel for the first time since 1988, telling reporters: “In Scunthorpe, we’ve been negotiating with the current owner, and a commercial sale has not been possible, and now a public interest test could be met.” ITV News
Business Secretary Peter Kyle said: “Strong domestic steel production is vital for our economy, and this legislation would allow us to ensure stability for British Steel’s workers, suppliers and customers and avoid damaging disruption to crucial supply chains, while we consider options for the site’s future.” Construction Enquirer
Starmer also said: “Steel is strategically important to our economy and our national resilience. This is what an activist state looks like — taking decisions in the national interest.” Construction Enquirer
Under the proposed legislation, the government would gain powers to nationalise British Steel subject to a public interest test being met, with the move framed as strengthening economic resilience and backing the government’s long-term ambition for a resilient, modern UK steel sector. GOV.UK
The decision also opens the way to progress a strategic investment plan to build a new electric arc furnace at Scunthorpe, allowing British Steel to produce greener steel — a product that several major government spending departments are already demanding for infrastructure projects including schools, prisons, and railways. Construction Enquirer
Talks With Jingye Collapse
The government said it had been in discussions with Jingye Group to find a “pragmatic and realistic solution” but had been unable to agree on a commercial sale with the current owner. The BBC reported that the search for a new buyer had stalled because Jingye had demanded hundreds of millions in taxpayer money for the Scunthorpe assets, according to reporting cited by industry sources. Engineering and Technology
Jingye bosses had previously warned that the Scunthorpe site, which employs approximately 3,500 people, was losing £700,000 a day and was no longer financially viable. Those losses were driven in large part by high UK energy costs and a global glut of low-cost Chinese steel. ITV News
As of March 26, 2026, the government had provided approximately £419 million in working capital to British Steel since emergency legislation was passed in April 2025. Who Is The Owner Of
UK Steel, the industry trade association, welcomed Starmer’s nationalisation announcement. Director General Gareth Stace said: “This provides vital certainty for the workforce, the company’s customers and the wider supply chain at a critical moment.” ITV News
Regional and Global Implications
The dispute carries weight beyond a single steel plant. Had the Scunthorpe facility been allowed to close, Britain would have become the only G7 country unable to produce new steel directly from iron ore — a strategic and symbolic vulnerability the Starmer government moved to prevent. Who Is The Owner Of
For China, the nationalisation of a major asset owned by a Chinese company represents a test case with implications for Chinese investment across Europe. Beijing’s decision to issue a formal commerce ministry statement — rather than a routine diplomatic comment — signals that it views the British action as having consequences beyond the bilateral relationship.
The dispute lands at a sensitive moment for UK-China trade ties. Britain is simultaneously managing efforts to reset commercial relations with China after years of tension, while also facing US pressure to align more closely with Washington’s approach to Chinese investment in strategic industries.
Jingye Group is a large Chinese private steel and industrial conglomerate based in Shijiazhuang, Hebei Province, that acquired British Steel in 2020 with promises of major investment — commitments that were never fully delivered. The collapse of the ownership arrangement will now set precedents for how compensation is calculated when the British state acquires assets from foreign investors. Who Is The Owner Of
Background
The British government stepped in under the Steel Industry (Special Measures) Act after fears arose that Jingye planned to shut Scunthorpe’s blast furnaces, seizing operational control of the works to prevent a shutdown that would have left the UK without the ability to produce virgin steel. Parliament passed that emergency legislation on April 12, 2025 — the first time parliament had been recalled for an emergency vote since the 1982 Falklands War, according to reports at the time. ITV News
The government said Jingye was prepared to cancel orders for the raw materials needed to keep the blast furnaces burning — a step that would have left Britain unable to make virgin steel for the first time since the Industrial Revolution. Experts warned at the time that shutting blast furnaces is operationally difficult and extremely costly to restart. Jingye had owned British Steel since 2020, when it purchased the struggling company following its collapse into insolvency the previous year. The Scunthorpe facility remains the last site in Britain capable of producing steel directly from iron ore, used in the construction of railways, buildings, and major national infrastructure. Who Is The Owner Of
What Happens Next
The legislation granting the government nationalisation powers was set out in the King’s Speech on Wednesday, May 13. Full nationalisation will be conditional on passing the public interest test, which evaluates factors including national security, critical national infrastructure, and broader economic impact, according to the UK government. In the longer term, the government has indicated it intends to progress a strategic investment plan to build a new electric arc furnace at Scunthorpe, transitioning the site to greener steelmaking. China has stated it will “closely follow” developments and has not ruled out formal retaliatory steps, though the specific measures remain unspecified. The British government has not publicly responded to Beijing’s Thursday warning. ITV NewsConstruction Enquirer
