Socialists do not need to be persuaded of the case for nationalization. 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 July 16, 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 compensation that remains in dispute, of a Chinese company that Britain itself invited in to rescue that industry six years ago. Jingye Group, which acquired British Steel in 2020, has demanded "full compensation" and threatened international arbitration, while the British Government argues the firm's commercial value is nil and may pay nothing.

A rescue rewarded with expropriation

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 pounds (approximately $90 million at the time), pledged 1.2 billion pounds (approximately $1.53 billion) of investment and secured more than 3,200 jobs—positions that would otherwise have vanished, along with an estimated 20,000 more in the supply chain, from communities that had precious little else.

British politician Alok Sharma hailed the sale as "an important vote of confidence in the United Kingdom's steel industry." Jingye kept its word: Over the course of five years, it invested the promised sums in modernizing 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 U.S. President Donald Trump's 25-percent tariff on British steel, imposed in March 2025. By that point Jingye reported that Scunthorpe, the site of the UK's last remaining integrated steelmaking plant, was losing around 700,000 pounds (around $952,000 at the time) 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.

Jingye had proposed the same solution adopted everywhere else in the industry: replacing the aging blast furnaces with cleaner electric arc furnaces, and it sought roughly 1 billion pounds (circa $1.33 billion) in state support for the transition. The government offered around half of that, refused to budge and let the talks collapse. When Jingye therefore moved to close down the site, having no realistic alternative, the government took operational control in April 2025, and this July, citing the need to safeguard a "vital national capability," it completed a full nationalization.

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 upward of 1.2 billion pounds 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: aging blast furnaces, heavy losses and a demand for state support. For the Indian-owned company, the money was found: a 500-million-pound ($665-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 British Government refused to contemplate for a Chinese owner, it signed with an Indian one. Nobody proposed nationalizing 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 controversial British politician Nigel Farage leading the charge and no shortage of Labour voices echoing him.

And suppose Scunthorpe had been owned by an American corporation that, after years of losses, sought state aid for decarbonization and threatened closure when it was refused. Does anyone seriously imagine a British government would seize the plant, declare it worthless and tell its U.S. owner to await the verdict of an "independent valuer" on whether it was entitled to anything at all? Clearly, the diplomatic consequences of expropriating U.S. capital are ones no British government would dream of incurring.

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 aging 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 pounds ($501 million), a figure set to pass 1.5 billion pounds ($1.9 billion) by 2028—substantially more than the deal Jingye originally proposed would have cost.

None of this requires reversing the nationalization. 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 led by Prime Minister Andy Burnham, which took office on July 20, would do well to ponder: "Those who harm others will inevitably harm themselves and broken promises will always backfire." BR

The author is an activist, writer and independent political commentator based in London, the United Kingdom. He is also author of The East Is Still Red: Chinese Socialism in the 21st Century (2023) 

Copyedited by Elsbeth van Paridon 

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