Steely comments as Chinese president’s state visit coincides with British job losses

The timing of the collapse of what’s left of Britain’s steel industry could hardly have been more ironic.

As the queen welcomed Chinese president Xi Jinping to London yesterday morning, 1,200 workers at Tata Steel in Scunthorpe and Scotland were being told their jobs are being axed, in large part because of the cheap steel China has been dumping on the global market.

The announcement from Tata, which owns the remains of the former British Steel business and is Britain's biggest steelmaker, came less than 24 hours after news that administrators had arrived at another steel group, Caparo Industries.

Caparo's collapse put 1,700 steelworkers' jobs at risk, mainly in the west Midlands. And earlier this month, liquidators were called in at Sahaviriya Steel Industries (SSI), the Thai-based owner of a large steelworks at Redcar on Teesside in the northeast of England, with the loss of 2,200 jobs.

With just 30,000 employed in Britain’s once dominant steel-manufacturing industry, one in six workers in the sector are now facing the axe, together with countless thousands of support workers. Union estimates suggest that for every direct steelmaking job cut, as many as four more are lost in sectors dependent on the industry.

As they left their plants yesterday after hearing the grim news, there was little doubt who the workers at Tata Steel blamed: the Chinese. In their formal statement on the closures, Tata’s Indian owners cited the “flood of cheap imports, particularly from China” but also said the strong pound and high electricity costs were a factor.

The steel industry was “struggling for its survival” and needs a fairer system to encourage growth – “inaction threatens the future of the entire European steel industry”, Tata said.

Senior company representatives braved the press and workers outside the plants to call for concerted action to deal with the flood of subsidised imports that has seen the steel price halve over the past year.

“It’s not just a question of Tata Steel,” said Tata’s Bimlendra Jha, “It’s a question of manufacturing industry in Britain.” As he called for action, he said: “In the cradle of the industrial revolution, I don’t want Britain to be the first country to shut its door on manufacturing.”

Industry’s future

In Westminster, members of parliament debated the escalating steel crisis with an emergency parliamentary question on the future of the industry.

Business secretary Sajid Javid stressed it was an EU-wide issue, and that there could be no simple solution. Javid appeared to play down China's part in the crisis: "It's a wider problem than just China," he said, indicating the government's options were limited. "There are limits to what a government can do. No government can change the price of steel in the global market. No government can dictate foreign exchange rates and no government can simply disregard international regulations on free trade and state aid," he told MPs.

Shadow business secretary Kevin Brennan was having none of it, however. To opposition jeers, he said the government appeared content to let the nation's steel industry disappear under the onslaught of Chinese dumping.

“While the Chinese president is riding down the Mall in a gilded state coach, British workers are being laid off because our government is not standing up for them,” he said.

The business secretary assured the commons prime minister David Cameron would raise the issue of steel dumping with the Chinese premier during his four-day state visit.

But, with the red carpet being rolled out for Xi – and with £30 billion of trade and investment deals to be announced during his visit – there is widespread scepticism that Cameron will be raising the issue in a particularly forceful way. Similar doubts are shared by those urging the prime minister to tackle Xi on human rights issues in China.

Power station

Cameron has hailed a new “golden era” between Britain and China and included in the flurry of deals this week will be the Hinkley Point nuclear power station in Somerset.

The Chinese are to take a one-third stake in the £24 billion project, due to be formally announced today. The first in a new generation of nuclear power plants in Britain, it is also expected to be the most expensive, and will ultimately provide 7 per cent of Britain’s electricity needs.

The deal on the multibillion-pound project, which is being led by the French company EDF, was agreed only hours before the Chinese premier arrived in London on Monday evening.

Fiona Walsh is business editor of theguardian.com