Chinese risks are proving too hot to handle in the UK

A major consequence of the United Kingdom’s resistance to rejoining the European single market is that it is forced to go around the world seeking trade deals and investment.

The UK has boasted of successful arrangements with India, the United States, and new agreements with the European Union. But it has also found itself courting one dubious suitor.

Since the British chancellor of the exchequer, Rachel Reeves, went to Beijing in January, the government has been focusing much of its attention on China.

And while investment from the world’s second-largest economy is fairly unproblematic in a few sectors – some services and domestic real estate – other areas are a cause for concern.

Relying on Chinese money to support such as as steel, telecommunications, advanced electronics, power and transport is potentially dangerous, as they are vital for the UK’s economic and geopolitical security.

Intelligence agencies

Yet it has been going on for years. Efforts to secure funding by a previous Conservative government even allowed China’s state-owned companies to invest in the UK’s nuclear future, despite considerable criticism from the intelligence agencies and the British military.

Then there was the 2017 acquisition by a Chinese state-backed private equity firm of cutting-edge semi-conductor company, Imagination Technologies. Concerns over the leaking of its intellectual property prompted a parliamentary enquiry into foreign corporate asset-stripping.

British Steel was also a target. Sold in 2019, it is now owned by a private company, Jingye, which in April 2025 moved to shut down operations at its Scunthorpe site by not supplying the raw materials required for its blast furnaces.

In response, the British government took emergency control of production in a scramble to stop the furnaces from going cold. That incident should have served as an urgent reminder that it needs to be wary of the effect Chinese companies can have on the UK.

Yet, early signs are not reassuring. Business Secretary Jonathan Reynolds commented that Jingye was not acting in the “rational way” he would expect of a company in a market economy.

But the government should know that when it comes to strategic decision-making, Chinese businesses do not operate in ways that others consider rational.

Put simply, they are not comparable to their equivalents in Britain or other liberal-market economies – because they are effectively controlled by the Chinese Communist Party.

According to the CCP’s data, by 2017 it had established a formal presence inside 92% of larger private companies and 73% of all private companies in China.

Those figures will certainly be higher now. And, as with the digital-technology firm Huawei, senior Party members are often on a company’s boards of directors.

Vital sectors

So, while Jingye almost eliminated British Steel as a viable company, it can be reasonably assumed that a decision of such strategic and geopolitical importance would not have been taken by Jingye’s executives alone. They would have been “guided” by the CCP.

And of course, it’s not just steel production the UK should be concerned about. Chinese ownership now extends across many vital sectors.

There’s the Chinese state-owned company, Beijing Construction Engineering helping to build a new science and innovation park next to Manchester airport. And the private Hong Kong company, CK Infrastructure which owns water companies in England.

Sate-owned China Investment Corporation owns part of Heathrow, while Beijing-backed Huaneng operates Europe’s largest battery storage facility in Wiltshire.

Privately-owned wind turbine producer Mingyang is the preferred bidder for a new Scottish wind farm, despite reputedly linked to the Chinese military and being barred from a similar Norwegian development.

All of these companies, irrespective of formal ownership, are likely to be subject to varying degrees of CCP influence and control. Chinese companies rarely comment on the issue.

And successive British governments have either failed to appreciate the implications of this, or have accepted it as the price of gaining greater access to the Chinese market – especially for London’s financial sector.

This was almost certainly a factor behind China’s involvement in the building of Hinkley Point’s new nuclear power station, and was at the forefront in Reeves’s discussions with the Chinese government in Beijing earlier this year.

Economic interests

Separately, Chinese investment in non-strategic sectors is much less controversial. The private conglomerate Fosun owns the English Premier League side Wolverhampton Wanderers and formerly controlled travel agency Thomas Cook.

But the lesson from the British Steel fiasco is clear. We are now in a world where the political interests of major states trump the economic interests of their business corporations. Geopolitics takes precedence over geoeconomics.

Consequently, Chinese firms – regardless of ownership status – should be barred from industries vital to the UK’s economic and political security. Anything less risks subordinating British interests to those of the Chinese Communist Party.

Jeffrey Henderson is Professor Emeritus of International Development at the University of Bristol in the United Kingdom.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.