In 1875, Britain, at the height of its Industrial RevolutionA period of sudden, rapid industrialisation that transforms a country from an agricultural to an industrial economy., produced almost 40% of the world's steel.¹ It was in British steel mills that engineers worked out how to make tungstenA hard metal often used in making light bulbs. steel, the strongest metal in the world, which is still used to make some of the world's most important industrial products.

Those glory days are long gone. Today, the British government is scrambling to save the very last fragment of its steel industry, which is owned not by a British company, but a Chinese one.

The Jingye GroupA Chinese conglomerate (a very large company made up of lots of other smaller companies) with businesses in steel, chemicals, international trade, tourism and hotels. bought British SteelA steel business founded in 2016 with assets acquired from other businesses. in 2019 when it was on the brink of collapse. Now it stands accused of letting its most important site, in ScunthorpeAn industrial town in Lincolnshire, England, with a population of 81,000. , shut down.

The Chinese steel giant was only the most recent of a number of Chinese companies eager to spend money in Britain. Three proposed nuclear power stations have received millions in Chinese funding. Many British utilities companies are also part-owned by Chinese firms.

Just 15 years ago, in fact, the UK government was positively encouraging Chinese companies to invest in Britain.

It was an idea that suited Chinese leaders. In 2013, the Chinese government announced its Belt and Road Initiative, an astonishing plan to invest in and build infrastructure for trade across more than 150 countries and international organisations. It is sometimes known as the "new Silk RoadA network of Eurasian trade routes linking China to the West, running from the second century BC to the 15th Century AD. ".

Then-prime minister David CameronThe UK's Conservative Party prime minister from 2010 to 2016. thought China was going to play an ever more important role in the global economy, and so it was worth positioning the UK to benefit. He thought deepening trade ties would boost the British economy and bring down prices, helping the country to weather the global economic crash of 2008.²

This was called the "Golden Era" in British-Chinese relations. However, in 2022, new PM Rishi SunakA British politician who was the Prime Minister of the United Kingdom from 2022 to 2024. announced that this era was over.

By this time, the government was already seeking to "decouple" the British economy from the Asian behemoth, especially in key strategic industries. In 2020, it decided to strip all HuaweiA Chinese multinational and technology company. technology out of its 5G network. Other European countries are likewise looking to reduce their ties with China.

The reason? China has come to be seen as more and more of a danger, especially after a slew of cyberattacks and spying scandals revealed its efforts to sabotage European governments.

Moreover, the Russian invasion of Ukraine seemed to reveal the dangers of becoming too dependent on autocraticRelating to a ruler with total power., illiberalLacking tolerance, bigoted. states. Because so much of its natural gas was imported from Russia, Europe was slow to react to the threat it posed.

It seemed an obvious step to prevent China from accessing important infrastructure, like nuclear power or telecommunicationsThe transmission of information over large distances using electronic means. .

However, the new Labour government is trying to carry out a balancing act: thawing relations with China without risking its security or its ties to the USA, China's great rival.

The reasoning is clear. As Chinese spokesperson Victor Gao pointed out recently, Britain does not compete with China in any major sectors.³ At a time of sluggish growth, it has little to lose and much to gain from letting Chinese investment flood the economy.

And since Donald Trump upended the global economy with his tariffs, China increasingly looks like a more reliable trading partner than the US.

However, many still worry that China is not just looking to trade with Europe, but to control it. And becoming addicted to Chinese money could give them the leverage they need.

Is Chinese money a threat?

Yes: China is a hostile nation that wants to strengthen its hand in the event of a future conflict with Europe. It is madness to be selling off bits of Britain's economy to a country that openly spies on us.

No: There is no particular reason why Europe and China should be hostile: they could simply have a mutually beneficial trading relationship, if they put political questions to one side.

Or... The Golden Era is over: it is too risky to give China a share in vital infrastructure. But Sino-European trading partnerships could be deepened in less sensitive areas.

Industrial Revolution - A period of sudden, rapid industrialisation that transforms a country from an agricultural to an industrial economy.

Tungsten - A hard metal often used in making light bulbs.

Jingye Group - A Chinese conglomerate (a very large company made up of lots of other smaller companies) with businesses in steel, chemicals, international trade, tourism and hotels.

British Steel - A steel business founded in 2016 with assets acquired from other businesses.

Scunthorpe - An industrial town in Lincolnshire, England, with a population of 81,000.

Silk Road - A network of Eurasian trade routes linking China to the West, running from the second century BC to the 15th Century AD.

David Cameron - The UK's Conservative Party prime minister from 2010 to 2016.

Rishi Sunak - A British politician who was the Prime Minister of the United Kingdom from 2022 to 2024.

Huawei - A Chinese multinational and technology company.

Autocratic - Relating to a ruler with total power.

Illiberal - Lacking tolerance, bigoted.

Telecommunications - The transmission of information over large distances using electronic means.