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.
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.
Against a backdrop of global overcapacity in much of the steel industry and challenges from US tariffs, Jingye wanted to import steel from China for further processing in Britain, Reynolds said in an interview with Sky News.
According to Reuters, 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.
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 bought British Steel from the government in 2020 after the company became insolvent.
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.
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.
