China has hit out at the nationalisation of British Steel, saying it “firmly opposes and is strongly dissatisfied with the British government’s decision”.
On Thursday, the UK government said that taking the loss-making firm into public hands would protect jobs and safeguard a “vital national capability”.
The UK took control of British Steel’s operations in Scunthorpe last year, though it was still owned by China’s Jingye Group, limiting the government’s ability to steer its future.
China’s commerce ministry said on Friday that the moves “seriously infringed upon Jingye’s legitimate rights and interests and severely undermined the confidence of Chinese companies investing in the UK”.
It also called on Britain to “faithfully fulfil” its obligations under the 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.
The statement added that Beijing would monitor developments closely and support Chinese firms to protect their rights, but did not specify what protecting Chinese companies’ rights might involve.
The decision to nationalise British Steel threatens to strain the relationship between London and Beijing just as Andy Burnham is set to become the prime minister on Monday.
The incoming PM will have to weigh his approach to the issue with the economic benefits of ties with the world’s second largest economy.
The nationalisation came after Parliament on Wednesday passed legislation allowing the government to bring the steel industry into public ownership under circumstances where it met a public interest test.
Jingye is seeking compensation, having previously said the business was losing £700,000 a day. The BBC has been unable to get a response from Jingye itself to Thursday’s announcement.
By taking British Steel into public ownership the government now has the power and freedom to decide on the future of the plant, while keeping the blast furnaces going.
It is unlikely the government will want to continue running the business in the long term as it is costing it more than a million pounds a day.
In March, the National Audit Office said the Scunthorpe steelworks was costing the government about £1.3m a day.
Business Secretary Peter Kyle told the BBC the government would need to cover the running costs “for the immediate future”.
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