The UK government's decision to seize control of British Steel from its Chinese owner, Jingye, has intensified calls for a broader reevaluation of Chinese investment in the country. The move, seen as a strategic intervention to protect national security and vital supply chains, comes against the backdrop of over two decades of deep Chinese financial involvement across key sectors of the British economy, the Financial Times reported.
Since 2000, Chinese firms — particularly state-owned enterprises — have poured more than $100 billion into the UK, according to data from the Rhodium Group. Much of this capital has targeted high-stakes areas such as energy, technology, transport, and real estate, raising alarms over economic vulnerabilities.
Energy, transport and telecoms under the spotlight
According to the American Enterprise Institute (AEI), nearly one-third of major Chinese investments in the UK have been in energy, tech, and transport — areas deemed strategically critical. Labour party officials and national security analysts have raised red flags about Chinese stakes in nuclear plants, telecom infrastructure, and transport hubs, citing risks to economic stability and national sovereignty.
Energy alone has accounted for nearly 20 percent of major Chinese investments since 2005, from wind farms off Scotland to gas networks across Wales and Northern Ireland. These deals were often attractive because of the technical and financial heft of Chinese state-owned entities, but that advantage is now being reconsidered as a potential liability.
Derek Scissors, a senior fellow at AEI, said, “The somewhat frightening downside is a role for the Chinese state in important national infrastructure,” underscoring concerns about state influence over critical assets.
Chinese stakes in key UK infrastructure
Among the most prominent state-linked players is China Investment Corporation, which owns nearly 9 percent of Thames Water and a 10 percent stake in Heathrow Airport. China General Nuclear (CGN) holds a minority stake in the Hinkley Point C nuclear project in Somerset, a collaboration with French energy giant EDF.
However, CGN’s ambitions for deeper involvement are now being curtailed. The UK government is preparing to block the company from investing in a proposed nuclear plant at Bradwell in Essex, citing mounting pressure to reduce Chinese influence over British energy security.
Meanwhile, private Chinese investors have also made inroads, particularly in real estate and manufacturing. Geely, the Chinese carmaker that owns Volvo, also controls the black taxi manufacturer LEVC and the sports car brand Lotus — both of which operate UK-based factories.
Investment decline reflects shifting sentiment
Despite the scale of Chinese investment in the past, both state-owned and private entities have sharply pulled back in recent years. Chinese FDI into major UK projects in 2023 was just 3 percent of what it was at its 2017 peak.
Scissors attributed the drop to stricter capital controls from Beijing, as well as Britain’s increasingly cautious stance. Many private investors, he noted, had turned to UK property markets in 2015–16 to move money out of China, but faced poor returns as asset values declined.
The UK isn’t alone in this trend. AEI data shows that Chinese investment in major projects across the US and Europe declined by 97 percent and 87 percent respectively between their mid-2010s peaks and last year.
Legacy deals remain a challenge for UK policymakers
According to Armand Meyer of the Rhodium Group, Britain’s previous openness to foreign investment in strategic sectors made it a prime target for Chinese capital over the last two decades. State-owned firms in particular have accounted for a “notably high share” of that funding.
But as the UK tightens investment screening and adopts a more cautious economic security strategy, it faces a thorny challenge: managing the legacy of deals struck long before the current scrutiny mechanisms were put in place.
“The UK has historically attracted more infrastructure investment from China than most other OECD economies,” Meyer said. “One of the key challenges... lies in the legacy of acquisitions completed before investment screening regimes were tightened.”
With the government’s intervention in British Steel, Britain appears to be drawing a new line — one that could redefine its investment posture in an era of growing geopolitical and economic rivalry.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
