The Chinese industrial giant Jingye has emerged as the leading contender to buy British Steel, which collapsed into administration in May.

According to a source Jingye was “extremely interested” in making a bid after senior executives – including its chairman, Li Ganpo – flew into the north of England last week for meetings with MPs, unions and advisers to the sale.

British Steel collapsed into liquidation in May, threatening 5,000 staff directly – 700 of whom work at Teesside’s Lackenby and Skinningrove sites and the rest at Scunthorpe – and at least 20,000 more in the supply chain.

Quick guide What went wrong at British Steel? Show Hide What plans does Jingye have for British Steel? Jingye's financial profile is relatively opaque, but the company is expected to pledge investment worth £1bn over the next decade. A person briefed on Jingye's thinking said the company wanted to preserve as many jobs as possible, but could not say how many of the company's 4,000 workers would keep their jobs. British Steel accounts for a third of UK production, so is seen as a key national asset in many quarters.

What went wrong at British Steel? When Greybull Capital bought British Steel in 2016 it promised great things. The private equity firm pledged to invest £400m and within months it was boasting of a return to profit and a bright future ahead. Three years later it collapsed. In a letter to staff, the British Steel chief executive blamed weak market demand, high raw material prices, the weakness of sterling and uncertainty over the outcome of Brexit discussions. Who is Jingye? Jingye emerged as the most likely owner after talks with Ataer, a division of the Turkish military pension fund Oyak, fell through in October. Founded in 1988 by a former Communist party official, Li Ganpo, the Chinese conglomerate has hotel and retail interests. However, steelmaking, which it started doing in the early 1990s, is now its primary focus: its Chinese mills produce about 15m tonnes of steel a year, exporting to 80 countries. How much is Brexit to blame? It is not the only factor in the crisis, but it is important and will remain crucial even if Jingye buys British Steel. Steel contracts are typically agreed well in advance of the product being delivered. As things stand, the UK is due to leave the EU on 31 January after another delay, and the terms of that separation are yet to be agreed, meaning British Steel’s overseas customers do not know what tariffs will apply to steel they buy from the company. Sources close to the company said orders from customers in the EU and further afield had dried up as a result. Is the whole UK steel industry in trouble? The UK steel industry has been in decline for some time because of a variety of factors such as overcapacity in EU steelmaking and Chinese state-subsidised firms flooding the global market with cheap product. An industry that employed 323,000 people in 1971 now employs less than a tenth of that, at 31,900. The closure of the Redcar steelworks in 2015 was a significant blow to the sector and left the UK with only two blast furnace steelworks: Scunthorpe and the Tata Steel-owned Port Talbot in south Wales.

Anna Turley, the Labour and Co-operative party MP for Redcar, who welcomed Li to British Steel’s Teesside plant, said of the meeting: “We discussed the future and huge potential of British Steel, especially our proud steel community and workforce. It remains my priority that the final buyer for British Steel must understand the UK industry and be invested in its future.”

Ben Houchen, the Conservative mayor of the Tees Valley, added: “Jingye – a Chinese steelmaker – are in advanced discussions to buy British Steel. They were one of the other bidders during the process a matter of weeks ago, but are now the frontrunners to buy the business. It was wonderful to listen to chairman Li about his plans for British Steel and what we can do together to project jobs on Teesside.”

However, any deal is bound to trigger concerns about the implications of Chinese ownership of a major British business.

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Ataer, owned by the Turkish military pension fund, is still in the frame, despite it not reaching an agreement during a recent 10-week period of exclusivity granted by the official receiver, which named the preferred bidder.

Liberty House, run by the Indian steel magnate Sanjeev Gupta, is also understood to be rekindling its interest in the business, although its bid is likely to result in jobs losses as it reportedly plans to turn its Scunthorpe plant into a steel recycling centre.

An unspecified but substantial financial indemnity provided by the government has enabled the company – via the official receiver – to continue to trade, even while insolvent.

As rescue talks continue, the threat to local jobs is likely to become a major campaigning issue in the forthcoming general election. If a buyer cannot be found and the steelworks shuts down the UK would in the future be forced to rely on overseas producers for certain types of steel used in construction and on railways.

The official receiver declined to comment. The Guardian contacted Jingye but did not hear back by the time of publication.