Ian Williams
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China’s involvement in Britain’s nuclear programme is a product of the Cameron-Osborne ‘golden era’ of relations, when it seems due diligence on any investment from Beijing depended on the number of zeros on the cheque. The precise deal struck is almost as opaque as CGN, but appears to involve a quid pro quo whereby China would stump up cash for French-led projects at Hinkley Point and Sizewell and in exchange be allowed to build its own nuclear power station at Bradwell on the Essex coast.
Hinkley Point construction is under way and well over budget. It is on course to be the world’s most expensive energy project at £22 billion, and CGN has a 33 per cent stake. When completed in 2026 it will produce enough electricity to meet around 7 per cent of Britain’s needs — at a considerable price to consumers. To make it worthwhile for the French-Chinese owners, the government has agreed to pay an inflation-linked guaranteed price twice the current UK wholesale price — and well in excess of renewables.
Sizewell in Suffolk has yet to begin construction. As is so often the way with Chinese investment, the goals are strategic, with Bradwell as the real prize — the first Chinese-designed plant outside its own borders, which Beijing sees as a springboard for international sales of its technology.
There are parallels here with Huawei. In 2005, BT awarded the company a contract as part of its £10 billion network modernisation. BT’s decision to exclude Marconi sounded the death knell for Britain’s once mighty technology giant, and provided a launch pad for Huawei’s international expansion.
The technical design of the Chinese reactor has yet to get regulatory approval, but in a little-noticed decision in December, Ofgem, the electricity market regulator, granted a generating licence to a company created by CGN to build the reactor in the Essex marshlands. The decision was hailed by the China-controlled Bradwell Power Generation Company as a ‘milestone’.
The government reportedly is now looking for ways of removing CGN from Sizewell and blocking Bradwell, but since all three projects are linked in the original deal, a spurned CGN is unlikely to stick around at Hinkley Point if it is turfed off the others. That will create an enormous financial black hole, and the government will have to either find other investors or stump up the money itself. That’s no easy task.
Protecting critical national infrastructure is supposedly a national priority. GCHQ’s National Cyber Security Centre is charged with doing just that, and its head, Lindy Cameron, recently boasted that ‘our ability to do this is the envy of the world’. She named China as a key adversary. Infrastructure doesn’t get much more critical than nuclear power stations, and Cameron’s words sit rather uncomfortably with the presence of CGN — a company accused in the US of benefiting from the very cyber espionage GCHQ seeks to protect us from.
The importance of the nuclear deal to China goes some way to explain why Beijing was relatively restrained in its response to Britain’s banning of Huawei from its next generation 5G networks in spite of dark threats to make us ‘suffer’. But if Britain excludes China from its nuclear programme, the gloves may well come off. Look no further than Australia to see Beijing’s commercial and political vindictiveness.
But Australia also tells another story. It was hit by a trade boycott after calling for an independent inquiry into the origin of Covid-19. It stood firm, and in spite of early fears the boycott has had limited impact economically. The experience has alerted Australia to the reality of Xi Jinping’s China, and the country is examining every facet of its overdependence on Beijing.
Little wonder that the UK government regards the nuclear decision as ‘sensitive’. Boris Johnson still appears to believe commercial relations with China can somehow be separated from politics. This was always a fallacy. Beijing does not hesitate to use trade and investment for coercion — and nuclear power is no exception.
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