On 16 July, the British government brought British Steel into full public ownership under the newly enacted Steel Industry (Nationalisation) Act 2026, seizing control of the Scunthorpe plant from its Chinese owner, Jingye Group. Within hours, China’s Ministry of Commerce issued a statement expressing “strong dissatisfaction” and “firm opposition,” accusing London of forcibly taking over the company in the name of national security and warning that the move had “severely undermined” the confidence of Chinese firms investing in the UK.

The UK government justified the nationalisation as essential to protect the “future of steel production” and to safeguard a “vital national capability.” According to officials in London, the Scunthorpe works—the country’s last producer of primary steel—supplies specialised grades for Network Rail and the construction industry, and its closure would have left the UK as the only G7 member without this capacity. Beijing countered that Jingye had rescued the loss-making firm, injected significant capital, and preserved thousands of jobs, only to see its legitimate rights “seriously infringed.” The Chinese statement called on the UK to “faithfully fulfil” its obligations under the 1986 China–UK Bilateral Investment Treaty and to treat Chinese enterprises fairly.

The takeover follows months of strained cohabitation. The UK government had already assumed operational control of the plant in 2025 after Jingye announced plans to close its blast furnaces, but the Chinese group retained ownership, limiting London’s ability to direct the site’s future. The works, which directly employs around 2,700 people, has been losing money at a rate the National Audit Office put at approximately £1.3 million per day. Business Secretary Peter Kyle told the BBC the state would cover running costs “for the immediate future,” while an independent valuer would be appointed in the autumn to determine compensation—a sum the government has indicated could be nil. Jingye, which has said the business was losing £700,000 a day, is seeking compensation.

The nationalisation injects a new irritant into UK–China relations just as a new prime minister, Andy Burnham, prepares to take office. Beijing said it would “closely follow developments,” support Chinese companies in pursuing legal remedies, and “take strong measures” to protect their interests, without specifying what those measures might entail. The 1986 investment treaty provides a legal framework for any dispute, but the UK government’s position that compensation may be zero sets the stage for a protracted stand-off. The independent valuation process, expected to begin in the autumn, will be the next concrete step in a dossier that now straddles commercial law, industrial strategy, and geopolitics.