The British Government's decision to put British Steel under state control has caused serious diplomatic tension with Beijing. Which accuses Downing Street's number 10 of using its concept as a pretext «national security» at the expense of Chinese interests.
The decision must not have surprised everyone who was watching the matter closely. Already since last March in the article «Chinese blackmail at British Steel drowns UK», Here., we had analysed the conflict between the Jingye Group which is one of China's largest private industrial giants, and the British government that financially supported the failed Chinese investment.
The report of the United Kingdom National Audit Office (NAO) on British Steel support expenditure has then caused an earthquake in both economic and political circles in London.
The British government had passed an extraordinary legislation as early as 2025 allowing it to take over the operational control of Scunthorpe's factory, after negotiations with owner Jingye on the transition to production with electric furnaces had failed. With the cost of the long-term support and rescue package exceeding £377 million over a period of less than 12 months, the British Steel case has emerged as one of the most costly and uncertain bets of British industrial policy in recent years.
In short, the daily cost of keeping British Steel in operation had reached £1.3 million with the Chinese side whistling indifferently. Demanding however £1 billion to leave the company's equity capital.
British Steel's importance to the British economy is highlighted through the following historical reference.
British Steel Corporation was founded in 1967 by the Labour government, on Prime Minister Harold Wilson. The objective of its establishment was to unify the country's 14 largest private steels, which faced economic problems and lack of investment. Upon its establishment, British Steel became one of the world's largest steel producers, employing about 270,000 workers.
The 1970s brought global economic recession and intense competition from Asia. The company started recording huge damage. Under Margaret Thatcher's government a tough restructuring programme was launched, within the general climate of privatisations and rearrangements in the steel and coal mines sector. Many factories closed and the workforce dropped dramatically from 166,000 in 1980 to 52,000 in 1988, in order for the company to turn a page to become profitable. British Steel is privatised in 1988 and becomes British Steel plc. In 1999, it merges with Dutch Koninklijke Hoogovens to create the Corus group. Which in turn is acquired by Indian giant Tata Steel against £In this way, 6.2 billion marks the end of British control over the major steel industry.
In 2016 Tata Steel because of accumulated losses sells most of the company against £1, in Greybull Capital. However despite initial optimism, the company collapses financially and becomes under forced management in 2019. In March 2020 he appears as «white knight» the Chinese Jingye Group which buys British Steel against £50 million, promising investments £1.2 billion to modernize the facilities and thus rescue the flagship plant in Scunthorpe.
In 2025, Jingye announced that British Steel was losing around £700,000 a day due to energy costs and environmental duties. And then, as mentioned above, the British Government was forced to intervene financially, with loans and direct support that exceeded the £370 million to prevent the closure of blast furnaces in Scunthorpe.
Thus while the ownership of British Steel's assets remained in the hands of Jingye Group, the British Government assumed substantial control over British Steel's operations through the extraordinary legislation known as the Steel Industry Special Measurements Act 2025.
However, the British government could not let British Steel collapse. It's the classic case. «too big to pay», because he is not just an employer of 4,000 workers in Scunthorpe. It is the main supplier of Network Rail, i.e. the country's rail network, but also a critical link to the supply chain of British defence and construction.
In case British Steel «He was blocking.», then the United Kingdom should import 100% of construction steel products, aggravating the current account. At the same time the cost of unemployment benefits and the economic devastation of the Lincolnshire region could exceed the cost of the current subsidy.
On 16 July the British Government announced that, as a sales agreement was not possible, the «public interest criterion» for statehood had now been fulfilled, leading to official statehood. Thus the British state now acquired full ownership of the company. At the same time, an independent assessment and evaluation will be carried out to determine whether or not Jingye is entitled to compensation.
The move caused a strong diplomatic reaction from Beijing. The Chinese Ministry of Commerce said that statehood «seriously undermined» the trust of Chinese companies to invest in the United Kingdom, accusing Britain that «forced» taking over control; and «ignored» Jingye's contribution to the British economy and society. Contribution strongly contested. Since the Chinese group not only did it not proceed with the investment amount £1.2 billion for the modernisation and rescue of the flagship plant in Scunthorpe, as planned but instead based on United Kingdom taxpayers' money.
The UK Steel branch has described the state-wide development that provides certainty to the workforce and the supply chain, but stressing that it is not an end in itself. And it now calls for a detailed investment strategy to switch to low-carbon steel, as well as action to address the country's high energy costs.
British Steel's statehood put an end to the decades of private initiative and ownership of the once-old state and flagship company, which had begun with the 1988 privatisation law by Prime Minister Margaret Thatcher. The Stateisation took place in the main light of the preservation of the United Kingdom's last primary steel plant.
