Is Britain prepared to go nuclear over China?
Beijing’s billions are helping to build Hinkley Point, with it as a minor partner, but its ambition for Bradwell generates more concern ‘Even if you wanted to disentangle the two countries, you probably couldn’t now’
The UK, we are led to believe, cannot afford to incur the wrath of China. Well, it is already too late for that. The ban on Huawei has infuriated Beijing. Retaliation is almost a certainty. That will be a concern for companies such as AstraZeneca, GlaxoSmithKline, Burberry, and Jaguar Land Rover, with sizeable interests in the region.
Yet that doesn’t mean China is about to unleash a full-blown economic war on Britain. Reprisals are likely to be measured and proportionate, at least for now.
A great deal depends on how much further the Government is prepared to go in curtailing trade and business ties with the world’s second superpower. But what about the assertion that the loss of Chinese investment would somehow imperil the UK economy? The Government has spent a decade courting China, and as a result, it has become a significant trading partner.
It is an increasingly important export market with £30.7bn of goods and services sold to the Chinese last year but again that’s only 4pc of all exports, whereas exports to the US at £58bn were nearly double, and 12pc of overseas sales.
The UK is also the number one European destination for Chinese foreign direct investment, and in the past five years China has ploughed more money into the economy than it had in the previous 30 years. It is now our fifth biggest source of FDI.
Chinese investors have poured billions into the London property market, gobbling up trophy assets such as the “Cheesegrater” and “Walkie Talkie” skyscrapers in the Square Mile, though much of that has come from Hong Kong, as opposed to mainland China.
In infrastructure, its role in a new 5G network may be dead, but China has its eye on helping to build HS2; and has built stakes in other key assets such as Heathrow Airport and Thames Water. Even if you wanted to disentangle the two countries, you probably couldn’t now. Instead, the two sides must find a way to live with each other and there is no better test of that then the nuclear industry. Thanks to the UK’s ineptitude at building its own critical infrastructure, China is at the heart of plans to build three nuclear plants on UK soil. Sizewell C, the project planned for the Suffolk coast, is now being referred to as “the next Huawei” in government but China’s CGN is only a junior partner in that, providing 20pc of the funds, alongside France’s EDF.
It’s the same arrangement the pair came to on Hinkley Point C in Somerset.
But Chinese money is different to Chinese technology. If China wants to bankroll big projects, then let it. Being a minority investment partner isn’t the same as wanting to build a nuclear plant 50 miles from London using an unproved Chinese reactor. That’s the quid pro quo on Hinkley and Sizewell: letting them build and operate Bradwell in Essex using their own untested technology.
That’s where the rubber hits the road – handing Beijing a kitemark that allows the Chinese to sell their prized technology around the world. If you’re a Sinophobe and you’re worried about China then who cares how much money they give us? Bradwell should be the main concern.
It’s not about whether we do business with China, it’s about where you draw the line.
Vaccines hold the key to recovery
The stock market has decided that there’s only one way for the global economy to recover: a Covid-19 vaccine. Every positive sliver of vaccine news sparks a corresponding spike in world markets. If it’s negative, stock prices head south.
Last week, the Nasdaq hit a record intraday high after the Food and Drug Administration granted “fast track” status to two coronavirus vaccine candidates.
Shares in AstraZeneca have repeatedly hit new highs amid growing expectations about the vaccine it is developing with Oxford University researchers. That the UK, thanks also to GlaxoSmithKline, is leading the way in the fight against coronavirus should be a source of pride.
But the vaccine race is a reminder of why this crisis is unique. Previous downturns have always been solved by economic policy. But all the government stimulus in the world can’t prevent fresh outbreaks, and whenever there are relapses, the recovery will be halted.
Research from Deutsche Bank shows that in the US, where Covid-19 cases are surging, restaurant visits are down 60pc on the same period last year. In Germany however, where the virus is considered to be relatively under control, the number of people eating in restaurants is up 5pc year on year.
It is vital then that the pandemic is tamed but even countries where the R rate is below 1 are susceptible to resurgences. As the markets have worked out, the rebound won’t be decided by economists and policymakers, this time, it is in the hands of the world’s best scientists.