China No Longer Welcome in Britain’s Steel Sector
Government Intervention Ensures Control of British Steel
London: China is no longer welcome in Britain’s steel sector after the government had to pass emergency legislation on Saturday to ensure control of Chinese-owned British Steel, business minister Jonathan Reynolds said on Sunday.
Refusal of Government Aid Package
Reynolds said the refusal of China’s Jingye Group to accept a roughly 500 million pound ($654 million) government aid package last week to stop irrevocable damage to blast furnaces left the government with no alternative to intervening directly. British Steel was not immediately available for comment outside office hours.
Background of the Issue
Against a backdrop of global overcapacity in much of the steel industry and challenges from U.S. tariffs, Jingye wanted to import steel from China for further processing in Britain, Reynolds said in an interview with Sky News. However, the closure of blast furnaces at the British Steel plant in Scunthorpe – which need to be constantly fuelled and are losing 700,000 pounds a day – would have left Britain as the only major economy unable to produce so-called virgin steel from iron ore, coke and other inputs.
Government’s Concerns
Previous British governments had been "naive" to allow Chinese companies to be involved in the steel sector, Reynolds said. Large industrial companies such as Jingye Group had direct links to the Chinese Communist Party and China’s government would understand why Jingye’s proposal was unacceptable to Britain, he added.
"You’ve got to be clear about what is the sort of sector where we can promote, cooperate; and ones, frankly, where we can’t. I wouldn’t personally bring a Chinese company into our steel sector. I think steel is a very sensitive area," he said.
Jingye’s Background
Jingye bought British Steel from the government in 2020 after the company became insolvent.
Government’s Stance on Chinese Investment
Since coming to office in 2024, the Labour government has stepped up engagement with China after tensions under previous Conservative governments over human rights, Hong Kong and latterly restrictions on investment over security concerns. Reynolds said he viewed other sectors such as car making, life sciences and agricultural products as less sensitive areas for Chinese investment.
Recent Developments
British finance minister Rachel Reeves visited Beijing in January and Chinese foreign minister Wang Yi visited London in February to revive talks that were paused for over six years.
Conclusion
The government’s decision to intervene in the British Steel crisis is a clear indication of its commitment to protecting the country’s strategic interests. The refusal of Jingye Group to accept the government’s aid package has left the government with no choice but to take control of the company. This move is likely to have significant implications for the steel industry in the UK and will require careful management to ensure a smooth transition.
FAQs
Q: Why did the government decide to intervene in the British Steel crisis?
A: The government intervened to ensure control of British Steel after Jingye Group refused to accept a government aid package to stop irrevocable damage to blast furnaces.
Q: What was the government’s aid package worth?
A: The government’s aid package was worth roughly 500 million pounds ($654 million).
Q: Why did Jingye Group want to import steel from China for further processing in Britain?
A: Jingye wanted to take advantage of global overcapacity in the steel industry and challenges from U.S. tariffs to increase its profits.
Q: What are the implications of this move for the steel industry in the UK?
A: The move is likely to have significant implications for the steel industry in the UK, requiring careful management to ensure a smooth transition.