China has condemned the British government’s move to take control of loss-making steelmaker British Steel, saying it “firmly opposes” the decision and is “strongly dissatisfied”. The UK announced on Thursday that placing the company into public hands would protect jobs and safeguard what it called a “vital national capability”. It said bringing the Scunthorpe business under state control would help manage the company’s future after years of losses. UK takes control as ownership remains abroadThe government took charge of British Steel’s operations at Scunthorpe last year, but the firm was still owned by China’s Jingye Group. That structure had limited ministers’ ability to steer how the plant develops. On Wednesday, Parliament passed legislation allowing the government to bring the steel industry into public ownership when a public interest test is met. The new powers were then used to nationalise British Steel. Beijing cites “legitimate rights” and treaty obligationsChina’s commerce ministry said on Friday that the steps “seriously infringed upon Jingye’s legitimate rights and interests and severely undermined the confidence of Chinese companies investing in the UK”. It also urged Britain to “faithfully fulfil” its obligations under the China–UK Bilateral Investment Treaty. The treaty, signed in 1986, is designed to promote and protect investment between the two countries. The ministry said the UK had ignored Jingye’s contribution to the economy and society and had “forcibly took control of the company in the name of national security”. The statement added that Beijing would monitor developments closely and support Chinese firms to protect their rights, but it did not set out what that support would involve. Potential strain as leadership change approachesThe nationalisation is likely to add pressure to relations between London and Beijing at a time when Andy Burnham is due to become prime minister on Monday. The incoming leader will face the task of balancing the issue with the potential economic benefits of maintaining links with the world’s second-largest economy. Jingye is seeking compensation, after previously saying the business was losing £700,000 a day. The BBC said it was unable to obtain a response from Jingye regarding Thursday’s announcement. State control set to be temporaryTaking British Steel into public ownership gives the government the power to decide how the Scunthorpe plant is run, while keeping its blast furnaces operating. The government is not expected to continue operating the business long term because it faces significant daily costs. The National Audit Office said in March that the steelworks was costing the government about £1.3m a day. A separate estimate cited in the wider reporting suggested the cost could be more than £1m daily. Business Secretary Peter Kyle told the BBC that the government would need to cover running costs “for the immediate future”, as it implements the new arrangements.
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