The UK should have seen the risks of China’s interest in British Steel

The UK government has taken back control of British Steel, but the takeover by China’s Jingye Steel was never just about economics, writes Michael Sheridan. It was part of Xi Jinping’s global strategy – and Britain should have seen it coming

It is a long way from Scunthorpe to the windswept plains of northeast China. But a journey to the hometown of the Chinese firm that owns British Steel would soon reveal to a traveller how closely Jingye Steel is integrated with the politics and strategy of the People’s Republic.

The foreign ministry in Beijing warned Britain on Monday to “avoid politicising and over-stretching the concept of security in economic and trade co-operation” after the UK government took control of British Steel by an act of Parliament.

That, frankly, was a bit rich.

The history of Hebei Jingye Steel, to give the owner its full title, is steeped in Communist Party lore. Its founder, Li Ganpo, served as a member of the National People’s Congress (NPC), the tame “parliament” that meets annually to endorse president Xi Jinping’s policies. And Jingye Steel is obedient to Xi’s vision of a new China that bestrides world trade like an industrial colossus.

The company’s promotional material notes with pride that its base in Pingshan County, Hebei Province, is “the revolutionary holy land” where the Party’s central committee had its headquarters in the last stages of the Chinese Civil War. It lists Li as a member of the 11th NPC, which sat from 2008 to 2013, during Xi’s ascent to supreme power. An official photograph shows him shaking hands with Li Keqiang, who served as Xi’s prime minister.

Li Ganpo himself is a local man, born in Pingshan in 1949 just as Chairman Mao Zedong’s armies were storming to victory and the “liberation” of China. He grew up in the socialist state, combining the roles of entrepreneur and Party cadre as the country moved from revolution to reform. He founded Jingye Steel in 1990.

From the start, Jingye was a strategic company under political control. Like every Chinese firm above a certain size, its executives are subordinate to a Party secretary overseeing a Party cell. The Party likes to keep such things secret, but it is a fair bet that Jingye’s Party secretary was the boss. Its access to capital was governed by state-owned banks. Its contracts were allocated by Party officials.

Jingye’s success is a mirror to the rise of modern China. Its steel was used to build the controversial Three Gorges Dam and the shiny new airport in Beijing. It reported revenues of more than £40bn in 2024, according to its corporate website.

But the company is about much more than glowing furnaces and smoking towers. It is in the vanguard of two key policies of Xi’s regime. It moved with agility to embrace his demand for “new productive forces” to propel China from metal-bashing to artificial intelligence, spending heavily on innovation, research and development.

Jingye established a National Enterprise Technology Centre, and it has been recognised as a “National Hi-Tech Enterprise”. It has moved into 3D manufacturing, pharmaceuticals – where it seeks to become a “highly competitive” maker of aspirin – and even “wellness tourism”. The company’s PR material gushes that it “remains committed to President Xi Jinping’s development philosophy that ‘clear waters and lush mountains are as valuable as mountains of gold and silver’.”

All this was funded by rivers of molten steel through a series of mergers and acquisitions of rival provincial steel companies, accomplished with Xi’s blessing. Company documents show that between 2014 and 2024, it took control of competitors from Inner Mongolia to the southern industrial powerhouse of Guangdong. In effect, Xi has made it a national champion.

The steel firm’s second role in Xi’s new vision is in the vanguard of his “Belt and Road” initiative to expand Chinese influence around the world by building and owning infrastructure, often funded by loans from state banks. It is an explicit rival to Western investment and development, free from strictures about human rights or the environment.

“In active response to the state’s ‘Belt and Road’ initiative, Jingye has vigorously promoted the internationalisation strategy,” the company proclaims. It exports to 80 countries and has more than 20 branches overseas. In Britain, its target was British Steel.

When Jingye took over British Steel in 2020, its publicity department said it was “an important result of active response” to the Belt and Road policy and “a vital step… of rolling out the internationalisation strategy”.

Little wonder that boss Li sits on numerous state-affiliated industry bodies under the United Front, the Party’s “magic weapon”, as Mao called it, dedicated to influence operations at home and abroad.

Amid all the recriminations, one thing is clear. There was no doubt about what Jingye represented or where it came from. British politicians and civil servants had access to all the information above. The question is why anybody could be surprised by the outcome.

“There is no such thing as a purely private company in China,” said Luke de Pulford, executive director of the Inter-Parliamentary Alliance on China, “there’s a deliberate strategy to subsume the private sector into the Party-State and to use Chinese commercial activity to further geopolitical aims”.

Whether Jingye’s actions over the last year were mere commercial rapaciousness or a crude strategy to make Britain dependent on China for its steel are matters that ought to be the focus of rigorous inquiries to come. Let us see if they are.

Michael Sheridan, longtime foreign correspondent and diplomatic editor of The Independent, is the author of ‘The Red Emperor’, published by Headline Press at £25