UK Business Secretary Jonathan Reynolds didn’t hold back during a parliamentary session last week when he accused the Chinese company Jingye of lacking “good faith” in their dealings.
“Despite our generous offer to Jingye, their expectations were substantially higher—indeed, unreasonably so,” he stated in the House of Commons.
Jingye acquired British Steel out of insolvency in 2020, vowing to usher in a “new chapter” for steelmaking in the UK.
However, that promising future never came to fruition.
The decision was made to halt the purchase of raw materials essential for operating the two blast furnaces in Scunthorpe, known as Queen Anne and Queen Bess.
Should these furnaces cool down completely, restarting them would be impossible, as the molten metal would solidify, leading to cracks if reheated.
The UK government extended its offer to assist with funding the purchase of these vital materials but failed to reach a consensus with Jingye.
Consequently, as MPs began their Easter recess, they were called back to pass emergency legislation enabling the government to assume control of British Steel.
This marked the first Saturday parliamentary session since 1982, during the Falklands War.
Within a day, the law was enacted, allowing the government to implement plans to secure necessary materials to keep Queen Anne and Queen Bess operational, preventing a crisis.
Chinese Fallout
The government asserted it had made several proposals to Jingye to maintain furnace operations, but ultimately, Mr. Reynolds was convinced that Jingye intended to close it down regardless.
Speculation arose that this could be part of a Chinese strategy to eliminate primary steelmaking in the UK, rendering the nation dependent on Chinese imports.
In subsequent interviews, Mr. Reynolds dismissed the possibility of future business relations with any Chinese company in the steel sector.
A steel worker is shown at British Steel’s Scunthorpe plant.
The Chinese response was unequivocal.
“The anti-China statements from some British politicians are exceedingly absurd, showcasing their arrogance, ignorance, and misguided thinking,” said the Chinese embassy in a statement.
A spokesperson for the embassy questioned: “At a time when the US is imposing tariffs on various countries, including the UK, and engaging in protectionist trade practices, why do these British politicians continue to malign the Chinese government and enterprises instead of targeting the United States? What are their motivations?”
Future China Relationship
This presents a dilemma for the UK.
Since taking office, Prime Minister Keir Starmer’s government has sought to strengthen international ties, including with China.
Cabinet members such as Chancellor Rachel Reeves, Foreign Secretary David Lammy, and Energy Secretary Ed Miliband have made visits to the country.
The Business Secretary, too, is scheduled to visit China later this year for trade discussions.
The Starmer administration has ambitious plans for AI, renewable energy, and foreign investment aimed at boosting the economy, with China being a key player in this strategy.
However, growing concerns persist regarding the trustworthiness of major Chinese firms.
Chinese firm Jingye purchased British Steel out of insolvency in 2020.
In their manifesto, Labour pledged to conduct an “audit” of both the “opportunities and challenges” posed by China.
This audit is expected to be released later this year.
Nevertheless, the UK has maintained a tough stance toward China for some time.
The i newspaper reported that the Defence Ministry recently prohibited electric vehicles with Chinese components from military training bases and “sensitive sites” due to intelligence concerns.
Other instances of tension between the two nations include a Labour MP being denied entry to Hong Kong last week in response to her criticisms of China, which Mr. Lammy described as unacceptable.
Last year, a businessman from China, closely linked to Prince Andrew, was barred from the UK over national security issues.
When questioned last week about permitting another Chinese investment in the steel plant, Mr. Reynolds confirmed he would not allow it.
UK Chancellor Rachel Reeves is “determined” to protect British industry.
However, it seemed he softened his stance a few days later.
“Our disagreement regarding the future was specific to this particular company,” he stated, noting that steel is a “sensitive sector”.
As the UK contends with tariffs from the US and a more complicated post-Brexit trading relationship with the EU, cutting ties with China could obstruct the government’s growth strategies.
Plans for Scunthorpe
The Scunthorpe plant employs over 2,700 individuals, with many additional jobs reliant on the facility.
During a visit on Thursday, Ms. Reeves assured employees that the outlook was “bright” for Scunthorpe.
Regarding future ownership, “nothing is off the table,” she remarked.
The UK government has indicated it may pursue legislation to facilitate the nationalization of the plant.
Whatever the outcome, Ms. Reeves assured that she is “determined to do whatever is necessary to safeguard British industry”.
This represents a reprieve for the Scunthorpe community, but the situation has sparked significant concerns about the future of the UK’s relationship with China.
