Under The Radar? Britain Just Nationalized A Chinese-Owned Firm
A new economic security crisis begins
“Alarm bells should be ringing across Western capitals as to what China may shudder next, and whether preemptive action should be taken.”
A few weeks ago, a massive event flew under the radar as the US and China collided over tariffs. The British Parliament, recalled from its easter break, only the sixth time this has occurred since World War II, faced a crisis of economic security and industrial stability.
Jingye Group, one of the world’s top 40 steel companies, had announced that it would be stopping raw material imports for the Scunthorpe plant, a steel plant in northern England. This in turn would halt steel production, paralyzing the future of domestically produced steel in the UK. The Scunthorpe plant is the last facility in the country to produce “virgin steel,” a type of steel that accounts for 70% of global steel supplies.
This whole saga has revealed, once again, that China controls highly critical and strategic resources and assets in the West, like steel production. This could be leveraged against the West in moments of great friction, like say, a US-China economic war.
British Steel, for example, was turned over to Jingye (China) in 2020, after talks began in 2019. Since the takeover, British Steel has lost an estimated 350 million pounds ($465 million), meaning Jingye’s control is not guided purely by business logic, but also potentially by political goals influenced by Beijing. From a business standpoint, this kind of loss is not justifiable (or sustainable).
But, British Steel is simply one of hundreds of firms across Western economies that China directly controls or has huge investments in. Alarm bells should be ringing across Western capitals as to what China may shudder next, and whether preemptive action should be taken.
GEOPOLITICAL DOOR OPENED
The UK’s nationalization of a Chinese-owned company completely changes the state of play between London and Beijing, and more broadly, between the West and China.
The British government has made it clear that it does not trust China, and is ready to activate the most radical cards, to ensure economic security. This nationalization was not just about saving jobs, as Jingye’s decision to stop raw material imports pushed the plant’s future up in the air. This was about ensuring that a foreign state, the West’s biggest adversary, was not dictating the production of critical resources within British borders. Economic security has and continues to surround this entire situation and saga.
Questions of “trust” have been mounting in recent times towards China, not just in the West, but across the Global South, as governments have collided with Beijing. The Philippines canceling the majority of BRI projects or Kenya turning to the IMF and World Bank over Chinese financing are based on a reassessment as to what China’s intentions truly are.
But the idea of nationalizing Chinese assets has only been whispered, let alone yelled.
The UK has now opened the door to this kind of action, including against the West. The myriad of Western businesses with operations in China now face the prospect of losing control of their operations to the Chinese government and falling into the same position as Jingye in the UK. And, the rest of the West may have little control over how its businesses are treated, as Trump raises the heat, like 245% tariffs on China, and Beijing retaliates by hitting the interests of US allies to indirectly raise the heat on the White House.
Equally important is that the West may take more such actions in the future.
In the past, the Chinese may have paraded their control of Western interests around. But this is now a “strike point.” In the US alone, iconic firms like AMC, the Chicago Stock Exchange, Smithfield Foods, GE Appliances, and Riot Games, are all fully or majority-owned by China. It is a similar situation in the UK, as Britain was the third-largest destination for Chinese foreign investment between 2005 and 2024, receiving $104 billion.
Conclusion
Out of the UK’s nationalization, the relationship between London and Beijing has been thrown down several levels. The Chinese will view this as an affront on its interests; the British will view it as necessary to ensure economic security.
Such a move could not have come at a worse time, as it only worsens the collision between the US, its allies, and the Chinese sphere of influence. The Chinese are sure to retaliate, either by doing “tit-for-tat” action (i.e. taking control of a British firm in China) or significantly cutting foreign investment into the British economy, and redirecting it to mainland Europe as the relationship between Brussels and Beijing rapidly improves.
Out of all this, the UK, whether by choice or circumstance, is now squarely planted with the US.
A new “geopolitical boundary” has been set. While the US and China clash in an economic war unseen in modern times, the UK and China represent a new battlefield, one that may be replicated in other geographies as governments push back China’s presence within their borders.
And in such an environment, nationalization is only the beginning.
-ABISHUR/MR. GEOPOLITICS
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