China has criticised the UK government’s decision to nationalise British Steel, warning that the move undermines investor confidence and violates the rights of its Chinese owner, Jingye Group.
In a statement issued on Friday, China’s Ministry of Commerce said the nationalisation “seriously infringed” on Jingye’s legitimate rights and interests and called on Britain to honour its obligations under the China–UK Bilateral Investment Treaty, signed in 1986 to protect investments between the two countries.
The UK government announced on Thursday that bringing the struggling steelmaker into public ownership would help protect jobs and preserve a vital national industrial capability. Although the government took operational control of British Steel’s Scunthorpe plant last year, the company remained under the ownership of China’s Jingye Group.
Beijing said it would closely monitor the situation and support Chinese companies in safeguarding their legal rights, although it did not specify what actions it may take.
The move is expected to add pressure to UK-China relations as Prime Minister-designate Andy Burnham prepares to take office on Monday. His administration is likely to face the challenge of balancing Britain’s economic relationship with China while defending strategic national interests.
The nationalisation follows legislation passed by Parliament on Wednesday, giving the government powers to bring steel companies into public ownership where it is deemed to be in the public interest.
Jingye is reportedly seeking compensation after previously stating that British Steel was losing around £700,000 ($950,000) per day. The company has not publicly responded to the government’s latest announcement.
