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UK ties with China at risk over nuclear plant deal
By Katherine HADDON
London (AFP) Aug 7, 2016

Britain's decision to delay final approval for the Hinkley Point nuclear power plant risks cooling relations with economic powerhouse China under new prime minister Theresa May, analysts say.

May's predecessor David Cameron, who quit after the June referendum vote to leave the European Union, made strong ties with Beijing central to his economic policy.

During a state visit last year, Britain rolled out the red carpet for Chinese President Xi Jinping as it sought to attract investment to its austerity-hit economy.

Cameron said Britain would be China's "best partner in the West" as they signed 40 billion pounds (47 billion euros, $53 billion) of deals, including Beijing taking a 6 billion pounds stake in Hinkley Point, Britain's first new nuclear plant in a generation.

A ceremony to sign the 18 billion pounds Hinkley Point deal was planned for July 29, the day after the other player in the deal, French energy giant EDF, finally approved the project which had deeply divided its top management as critics fear it could bankrupt the French utility.

However, the French government, which owns 85 percent of EDF, has been doggedly determined to get Hinkley Point approved as it sees the project as crucial for the long-term viability of France's nuclear industry.

But Britain's new leader May, who took power on July 13, had already decided to delay the final decision on the project, which is now expected in September.

There are questions over whether the delay could jeopardise ties between Britain and China, the world's second biggest economy, at a time when London will need to build strong trade links post-Brexit.

"They (the British government) have created a bit of a problem," Professor Kerry Brown, director of the Lau China Institute at King's College London, told AFP.

"The more of a sense that we're open for business at the moment, the better."

- National security fears -

Chinese state media reacted to the delay by saying it "adds uncertainties to the 'Golden Era' of China-UK ties".

Beijing "cannot tolerate" any accusation that its investment would threaten British national security, the official Xinhua news agency said.

While it is still unclear whether May, a former home secretary, will scrap or approve the project, her joint chief of staff has previously made his scepticism clear.

Nick Timothy wrote it was "baffling" that Britain had welcomed investment by state-owned Chinese companies given fears they could build weaknesses into IT systems, "which will allow them to shut down Britain's energy production at will".

"No amount of trade and investment should justify allowing a hostile state easy access to the country's critical national infrastructure," he added in a Conservative Home blog last year.

There are also questions over whether the project represents value for money and its environmental credentials.

The British press has welcomed the delay.

The Observer newspaper said in an editorial that, while the move had "ruffled diplomatic feathers", it was "the right decision" given the financial and security risks.

The Independent said it thought Sino-British relations would remain positive but that "we would be wise not to be over-reliant on anyone to keep our lights on".

- 'Costly, unnecessary risk' -

Howard Wheeldon, a defence and strategic analyst with his own consultancy, predicted the delay "probably marks the end of the scheme as we have come to know it."

"We just cannot afford to take such a massive, costly and -- given that it will only supply seven percent of the UK's electricity needs -- unnecessary risk," he said.

Analyst Brown noted that while Beijing could be understanding of an "initial cautiousness" under a new British administration, that would likely change if the project is scrapped.

"They would read this all as a sign that the UK-China relations have become cautious again, going back to the default which is just to be a bit wary of each other," he said.

The prime minister's official spokeswoman insisted the government would "continue to seek a strong relationship with China" and needed a "reliable and secure energy supply".

But with May's government shaking off much of Cameron's economic legacy -- signalling a less hardline approach to austerity and introducing a new industrial strategy -- the options look wide open.



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Previous Report
France's EDF 'knew in advance' about British nuclear plan delay
Paris (AFP) Aug 3, 2016
French energy giant EDF learned the British government wanted to delay its final decision on the Hinkley Point nuclear power plant the day before its board met to approve the plan, according to an email from its CEO seen by AFP. EDF approved the Pounds 18 billion project ($24 billion, 21 billion euro) plan to build Britain's first new nuclear plant in decades - a project that had deeply divided t ... read more

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