A deal is expected to be struck during UK chancellor George Osborne's current visit to China that would allow the Chinese government to build a nuclear power station in Bradwell, Essex through one of its state-owned nuclear companies.
The chancellor, on a trade mission to the country, argued that Britain should develop closer trade ties with China to help boost both economies, a reference to the present period of sharp falls in the Chinese stock market, and signalled that China could build a new nuclear plant using Chinese technology as part of a wider nuclear co-operation.
The potential deal is seen as an attempted sweetener to encourage China to firm up on its investment option in the Hinkley Point C nuclear project in the UK, and comes the day after the chancellor announced £2 billion in loan guarantees for the £24.5 billion plant.
Speaking at a press conference, Osborne was asked about what US officials have called Britain's "constant accommodation" of Beijing. He commented "I think it is important that, as China grows, it rightly takes its place at the top table." However, despite Osborne's optimism, Mark Carney, the governor of the Bank of England, said on Monday that China could be heading for a rough economic patch. In a speech in London, Carney described China's economic 'miracle' in the last three decades as extraordinary, but noted that performance since the recession of 2008-09 had "been bolstered by a large build-up of debt, which has more than doubled to reach almost 200% of GDP".
The Bradwell site is owned by EDF, the state-owned French energy company. EDF is also the lead partner with two Chinese companies in the building of Hinkley Point C, the first nuclear power station to be built in Britain for a generation. But the project has been much delayed and EDF has struggled to finance it. Some industry observers believe that the Chinese agreement to help finance Hinkley is conditional on the UK allowing Chinese companies to construct their own nuclear plant at Bradwell.
The energy minister, Amber Rudd, who is accompanying Osborne on his China trade mission, said the UK would benefit from the low-carbon energy, while China wanted a first showcase in the west for its newly developed nuclear technology. "They very much want to have their design up and running in the UK," she told the Financial Times. This is a reference to the much tougher regulatory standards in the UK, especially compared to those in China, and would confer a seal of approval that would help immeasurably in boosting sales of Chinese nukes around the world.
The irony of this situation is presumably not lost on Osborne and Rudd. Chinese nuclear technology has been developed from Framatome (now Areva) and Westinghouse PWR designs via technology transfer, and further global co-operation with Westinghouse is expected. Westinghouse was owned by the British government until it was sold to Toshiba in 2006 for $5.4bn.
Not universal enthusiasm
Not all interested parties are so enthusiastic. While welcoming the £2bn support for Hinkley Point C, the GMB union, which represents nuclear workers, said linking that deal to a reactor at Bradwell would be a "betrayal" of British workers. Brian Strutton, GMB national secretary for energy, said: "Chinese nuclear technology is unproven and no UK government should even consider allowing it to be used in a new nuclear power station 60 miles from London."
Moreover, various experts including analysts and prominent bankers have already condemned the Hinkley deal. Lord Turnbull, former head of the civil service, told Osborne that it was a "bottomless pit and a big white elephant", while the former energy minister Lord Howell, Osborne's father-in-law, said it was "one of the worst deals ever" for British consumers and industry.
Nor has Mr Osborne made much of the opportunity to highlight the intensifying human rights crackdown in China, usually a permanent point on the agenda in any Chinese talks with the West, which reportedly has seen more than 200 lawyers and activists detained, interrogated or simply vanished since July.