In July, the British government completed the full nationalisation of British Steel – a move welcomed by the country’s trade unions, and one socialists have no reason to oppose in principle. But as Carlos Martinez argues in the following article, what took place was not simply the homecoming of a strategic industry. It was the expropriation of the Chinese firm that Britain itself invited in to rescue that industry six years ago, and which invested upwards of £1.2 billion doing so.
Comparing the treatment of Jingye Group with the £500 million subsidy handed to India’s Tata Steel for an almost identical transition at Port Talbot, he argues that this is a story about China rather than about steel – part of a wider pattern that takes in the seizure of Nexperia in the Netherlands, the forced sale of TikTok in the United States and the blocking of Chinese rare-earth investment in Australia. Nationalisation, he concludes, need not be reversed; it needs to be completed honestly, with prompt and adequate compensation, and with China engaged as the obvious partner for the green transformation Scunthorpe needs.
A version of this article first appeared in Beijing Review.
Socialists do not need to be persuaded of the case for nationalisation. Public ownership of steel – a foundational industry on which construction, rail, energy and shipbuilding all depend – has been a demand of the British labour movement for the best part of a century, hence Britain’s trade unions welcomed the government’s decision, which took effect on 16 July, to bring British Steel fully into public hands.
But the story does not end there. What the British government has carried out is not simply the homecoming of a strategic industry; it is the expropriation, with what the former owner describes as “almost zero compensation”, of a Chinese company that Britain itself invited in to rescue that industry six years ago.
A rescue rewarded with expropriation
The facts are not seriously in dispute. British Steel collapsed into insolvency in 2019, and no British buyer could be found. In March 2020, in a deal brokered by the British government itself, the Jingye Group bought the company for around £70 million, pledged £1.2 billion of investment, and secured more than three thousand jobs – jobs that would otherwise have vanished, along with several thousand more in the supply chain, from communities that had precious little else.
Alok Sharma, then business secretary, hailed the sale as “an important vote of confidence in the UK’s steel industry”. Jingye kept its word: over five years it invested the promised sums in modernising plant and equipment, briefly returned the company to profitability, and kept both the blast furnaces and the payroll going through a period in which British industrial energy prices remained among the highest in the developed world.
What broke the business was not Chinese perfidy but the world market – chronic global overcapacity, a further rise in energy costs, and finally Donald Trump’s 25 percent tariff on British steel, imposed in March 2025. By that point Jingye reported that Scunthorpe was losing around £700,000 a day – a figure that ministers and commentators openly scoffed at as a negotiating exaggeration.
That scoffing has since stopped: with the plant in public hands, the cost to the taxpayer of keeping it running is now conservatively estimated at almost double that rate (£1.3 million per day).
Jingye had proposed the same solution adopted everywhere else in the industry: replacing the ageing blast furnaces with cleaner electric arc furnaces, and it sought roughly £1 billion in state support for the transition. The government offered around half, refused to move, and let the talks collapse. When Jingye therefore moved to close the site, having no realistic alternative, the government took operational control in April 2025, and in July – citing the need to safeguard a “vital national capability” – it completed a full nationalisation.
In a sleight of hand that falls well outside the usual rules of business, the government declared the commercial value of British Steel to be nil, and promised only a compensation scheme, to be legislated in the autumn, under which an independent valuer will determine “what, if any” payment Jingye is owed. So a company that spent upwards of £1.2 billion rescuing a British industrial icon is expected to be content with the hope it might receive something above zero.
Jingye has called the seizure “blatant extortion and a flagrant violation of international law”, initiated consultations under the China–UK bilateral investment treaty, and vowed to pursue “full compensation through legal means to the very end”. China’s Ministry of Commerce has stated that it “firmly opposes and is strongly dissatisfied with” a decision that “seriously infringed” Jingye’s rights and “severely undermined the confidence of Chinese companies investing in the UK”.
The contradiction at the heart of the British position is easy enough to spot. A steelworks cannot simultaneously be a vital national asset – the last plant in Britain capable of producing virgin steel, the source of 90 percent of the country’s railway track – and a worthless one. If its value to Britain is strategic and immense, then the state that takes it should pay for it.
The Tata test
That this is about China, and not about steel, is demonstrated by a simple comparison. Tata Steel’s Port Talbot works in south Wales faced a very similar crisis: ageing blast furnaces, heavy losses, a demand for state support. For the Indian-owned company, the money was found: a £500 million subsidy for its electric arc furnace transition, agreed even as Tata shed 2,500 jobs – and Tata kept its property.
The very deal the government refused to contemplate for a Chinese owner, it signed with an Indian one. Nobody proposed nationalising Tata’s assets without compensation. Nobody demanded an “urgent security review” of Indian investment in British infrastructure. No front bench figure suggested that Tata’s hard bargaining was a plot by New Delhi to sabotage a strategic British industry – accusations that were made, explicitly and repeatedly, about Jingye and Beijing, with Nigel Farage leading the charge and no shortage of Labour voices echoing him.
And suppose Scunthorpe had been owned by a US corporation that, after years of losses, sought state aid for decarbonisation and threatened closure when it was refused. Does anyone seriously imagine a British government would seize the plant, declare it worthless, and tell its US owner to await the verdict of an “independent valuer” on whether it was entitled to anything at all? Clearly, the diplomatic consequences of expropriating US capital are ones no British government would dream of incurring. The geopolitics behind the story is that Britain has compromised its economic wellbeing and its industrial policy in order to fall in line with the US-led New Cold War.
A pattern, not an incident
We are seeing a pattern emerging across the West. In the Netherlands, the government invoked a dusty Cold War statute to seize control of Nexperia, the Chinese-owned chipmaker, from its lawful shareholders. In the United States, TikTok was ordered to sell itself or be banned. Australia is now actively blocking Chinese investments in critical rare earth projects. The language of national security is being deployed to justify anti-China measures.
Ironically, these are the same Western governments that lecture the world – and China above all – on the rule of law, the sanctity of contract and the protection of property rights, and that spent decades demanding China open its economy to foreign capital. When Chinese capital ventures abroad, investing where it is invited, and keeping its commitments, it discovers that the rules were only ever meant to run in one direction. Other Chinese firms will no doubt draw the obvious conclusion.
Two historical notes
It is worth noting, in passing, that Britain is the imperial power that forced China to open at gunpoint in the Opium Wars; that seized Hong Kong; that imposed, in the Treaty of Nanjing and again after the Yihetuan Movement (‘Boxer Rebellion’), crushing indemnities on the Chinese people – “compensation”, extracted by warships, for China’s attempt to stop the British drug trade and to assert its sovereignty.
When socialist China carried out its own transformation of industry in the 1950s, it bought out its national capitalists through negotiated redemption payments rather than confiscation. When it recovered Hong Kong itself, it did so through fifteen years of patient negotiation and a constitutional guarantee of the territory’s existing system.
And what does Beijing ask of London today? Solely that Britain, in the words of China’s Foreign Ministry, “earnestly respect market principles and the spirit of contract, and find solutions on compensation and other issues acceptable to both sides”. By any historical or comparative measure, this is a modest request.
What a serious government would do
Meanwhile, Britain has gifted itself a prize it does not know what to do with. Having refused Jingye’s transition plan as too expensive, the government now owns the same ageing blast furnaces, the same losses, and has no published plan for the plant’s future. The National Audit Office reports that running Scunthorpe has already cost the taxpayer £377 million, a figure set to pass £1.5 billion by 2028 – substantially more than the deal Jingye originally proposed would have cost.
None of this requires reversing the nationalisation. It requires completing it honestly and fairly: prompt, adequate and effective compensation settled through genuine consultation; and engagement with China – which built every one of its new steel plants in 2024 as electric arc furnaces – as the obvious partner for the green transformation Scunthorpe needs.
Jingye’s warning is one Britain’s new government would do well to ponder: “Those who harm others will inevitably harm themselves and broken promises will always backfire”.
