China is escalating its criticism of the UK after Britain moves to nationalise British Steel and take full control of the loss-making producer. The dispute adds pressure to China-UK investment ties as Beijing says the action harms Chinese investor confidence in Britain.
Highlights
- China's commerce ministry condemns the UK's forcible takeover of British Steel from Jingye, citing disregard for Chinese contributions and damage to investor confidence.
- Britain nationalises British Steel from Jingye to secure domestic steel production, following the company's losses prior to the takeover.
- China warns it will monitor developments closely and urges the UK to honour the China-UK Investment Protection Agreement to safeguard Chinese business interests.
Beijing response to the steel takeover
As reported by Reuters, China's commerce ministry says the UK has "forcibly" taken over British Steel and "disregarded" the contributions of its Chinese owner Jingye to the British economy and society.The ministry says Britain's decision seriously damages Jingye's legitimate rights and interests, and severely undermines the confidence of Chinese companies investing in the UK. Beijing also says it will closely monitor developments and support Chinese firms in protecting their rights.
Investment implications for China-UK relations
Britain nationalises British Steel on Thursday, taking over the company from Jingye in an effort to protect the future of domestic steel production. The company had been operating at a loss before the takeover.China is urging the UK to provide fair treatment for Chinese businesses and to fulfil its obligations under the China-UK Investment Protection Agreement. The commerce ministry does not specify what actions support for Chinese companies' rights could involve.
In our earlier article on the surge in overseas takeovers of UK-listed companies, we noted that acquisition activity has far outpaced new stock market listings, reflecting subdued valuations and weaker confidence in the London market. We also highlighted the view that clearer policymaking and a steadier business environment are needed to sustain long-term investment and keep more corporate growth anchored in the UK.
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