Nothing symbolises Chinese national industrial power more potently than steel. That is one reason why the Chinese state is indirectly taking a controlling stake in the country’s top speciality steel producer via a $2bn deal. The second reason is the long-term commercial opportunity presented by the automotive industry.

State-owned conglomerate CITIC outbid private sector rivals for 55 per cent of Nanjing Iron & Steel Group. It is making the investment via subsidiary Xinye, which is spending Rmb13.6bn ($2bn) on securities issued by Nanjing. Xinye trumped aggressive bids from top private steelmaker Jiangsu Shagang Group. 

Speciality steel is crucial to car production. Manufacturers vary the recipe for the metal to improve characteristics such as heat resistance and corrosion resistance. They can command good margins.