China has strongly condemned the UK government's decision to nationalise British Steel, calling the move a breach of Beijing's rights and warning it could deter Chinese firms from investing in Britain. The dispute broke out just days before Andy Burnham was due to enter Downing Street as prime minister, and it left his incoming government facing an early test of how to balance national security concerns with the economic value of maintaining ties with China, the world's second-largest economy.

The UK had taken operational control of British Steel's Scunthorpe site last year, though ownership remained with China's Jingye Group. After Parliament passed legislation on Wednesday allowing public ownership on public-interest grounds, the plant was formally nationalised on Thursday, with ministers citing job protection and a "vital national capability". China's commerce ministry said this "forcibly" stripped Jingye of its legitimate rights and urged the UK to honour the 1986 China-UK Bilateral Investment Treaty, though it stopped short of detailing any retaliatory steps. Jingye, which said the plant had been losing £700,000 a day, is seeking compensation; the government has said an independent valuer will assess this in autumn, with the amount potentially being nil. The Scunthorpe works employ around 2,700 people directly, cost the taxpayer roughly £1.3m a day to run, and are the UK's only remaining source of virgin steel — without them, Britain would be the sole G7 country unable to produce it.