EXPLAINER<\/p>\n
The UK move to take over British Steel fuels a brewing dispute with China amid political leadership change in London.<\/p>\n
A Chinese company is demanding compensation from the United Kingdom government for investment losses following the nationalisation of a steel plant last week.<\/p>\n
Jingye Steel asked the UK on Sunday to immediately stop \u201ctrampling on international investment rules\u201d and to \u2060\u2060promptly, fully and effectively compensate the company for all \u2060\u2060investment losses incurred in the decision to nationalise British Steel.<\/p>\n
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The UK government took operational control of the company last year after Jingye Group said it was considering closing the blast furnaces at its Scunthorpe plant in northern England, the last in the UK to make \u201cvirgin steel\u201d from raw materials.<\/p>\n
Here is what we know about the controversy:<\/p>\n
Why nationalise the plant?<\/p>\n
The government says it has nationalised British Steel to protect the nation\u2019s steelmaking capacity and to prevent the company\u2019s Chinese owners from shutting the plant\u2019s blast furnaces.<\/p>\n
The Department for Business and Trade announced the move on Thursday, saying it would save thousands of jobs and protect the UK\u2019s national interest by ensuring a supply of domestically produced steel for major construction projects and the defence industry.<\/p>\n
\u201cBritish Steel now belongs to the British people and our focus is on the future: stabilising the business, backing the communities that rely on it and building a sustainable, competitive and decarbonised steel sector for the years ahead,\u201d said Business Secretary Peter Kyle in a statement.<\/p>\n
The dispute comes as Labour Party leader Andy Burnham is expected to succeed Keir Starmer as prime minister on Monday, potentially starting his first term in office with a standoff with China, one of the UK\u2019s largest trading partners.<\/p>\n
How has China responded?<\/strong><\/p>\n In a statement on Sunday, Jingye Group said the British side has \u201cdisregarded dedicated ongoing investment and \u200c\u200csignificant contributions\u201d, offering \u201calmost zero compensation\u201d.<\/p>\n The company also pointed out that the UK had spent 377 million pounds ($507m) \u2060\u2060to operate British \u2060\u2060Steel as of the end of January. It also expected the total to \u2060\u2060have exceeded 600 million pounds ($807m) by the end \u2060\u2060of June and possibly \u2060\u2060exceeding $2bn (1.5 billion pounds) by 2028.<\/p>\n China said it would closely monitor developments and \u200c\u200cwill take appropriate measures to safeguard legitimate rights and interests if warranted.<\/p>\n China\u2019s Ministry of Commerce said the UK was \u201cdisregarding\u201d Jingye\u2019s contributions to the British economy and that it \u201cforcibly took over and then nationalised\u201d British Steel in the name of national security, \u201cseriously damaging\u201d Jingye\u2019s legitimate rights and interests and \u201cseriously undermining\u201d Chinese investor confidence in the UK.<\/p>\n China\u2019s Ministry of Foreign Affairs pointed to Britain\u2019s legal obligations, saying: \u201cChina and the UK have signed an investment protection agreement and investors\u2019 legitimate and lawful rights and interests must be fully protected in accordance with the law.\u201d<\/p>\n China and the UK signed a bilateral investment treaty in 1986, which includes \u201cprotection from arbitrary expropriation without compensation\u201d \u2013 the clause Jingye is referring to in its claim for compensation.<\/p>\n What happened at British Steel?<\/p>\n British Steel is reported to have played a significant role in the UK economy due to its steel producing capabilities from raw materials instead of recycled scrap metal.<\/p>\n Its Scunthorpe plant has nearly 2,700 employees and produces about three million tonnes of steel a year. But it was not always profitable.<\/p>\n In 2016, Tata Steel sold the company for one pound to private investment firm Greybull Capital, which renamed it British Steel.<\/p>\n However, amid a financial crisis in 2019, the British government\u2019s insolvency service took over the company, which was sold the following year to Jingye.<\/p>\n The UK government says British Steel was losing hundreds of thousands of pounds a day by operating the struggling steel manufacturing company. It said the plant relied on the British government\u2019s support for its continued operations.<\/p>\n Government ministers said if the financial losses continued, Britain would be fully dependent on international markets to supply foundational materials needed for construction and other sectors.<\/p>\n \u201cBritish Steel is part of the fabric of our nation and a cornerstone of Britain\u2019s industrial strength,\u201d Prime Minister Keir Starmer told parliament.<\/p>\n","protected":false},"excerpt":{"rendered":"EXPLAINER The UK move to take over British Steel fuels a brewing dispute with China amid political leadership…\n","protected":false},"author":3,"featured_media":945683,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[6],"tags":[13214,23127,64,74,440,13790,50,80,8304,376,67,132,68],"class_list":["post-945682","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-asia-pacific","tag-brexit","tag-business","tag-china","tag-europe","tag-international-trade","tag-news","tag-politics","tag-trade-war","tag-united-kingdom","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116947444541903695","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/945682","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=945682"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/945682\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/945683"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=945682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=945682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=945682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}