China: Hinkley row could end golden era of UK deals
CHINA last night warned that its ‘golden era’ of co- operation with Britain could be over following the decision to delay plans for a nuclear power station at Hinkley Point.
The country’s state-run news agency Xinhua – which reflects official views in Beijing – blasted the ‘suspicious approach’ to Chinese investment in the £18billion project.
Theresa May last week put plans for the nuclear reactor in Somerset under review amid national security concerns over the role of China in the scheme.
It marked a dramatic shift in tone from the UK government after David Cameron and George Osborne spent years fostering closer relations with Beijing.
Last September Mr Osborne went on a trade mission to China to attract investment in the HS2 project, urging firms based in the country to bid for seven contracts worth £11.8billion covering phase one of the high speed railway, from London to Birmingham.
It is feared the Hinkley Point hold-up could now adversely affect any such investment.
Officially the Chinese government said it hoped for a speedy resolution to the Hinkley situation. But Xinhua reacted more strongly in a commentary that said China would not tolerate ‘unwanted accusations’ about its investments in the UK.
It said the delay ‘not only draws queries from the international community about its openness towards foreign investment, but also adds uncertainties to the “golden era” of China-UK ties’.
Xinhua went on: ‘Giving the green light to a $24billion project can never be an easy decision, and China fully understands and respects the British government’s requirement for more time to ponder. However, what China cannot understand is the “suspicious approach” that comes from nowhere to Chinese investment in making the postponement.’
The news agency said China could ‘wait for a rational British government to make responsible deci- sions, but cannot tolerate any unwanted accusation against its sincere and benign willingness for win-win co-operation’.
Pressure is mounting on the Prime Minister to approve the Hinkley plans. As well as anger from China there are fears the French could claim £2.5billion compensation if the project is scrapped. French energy firm EDF has been contracted to build the plant in a joint venture with China General Nuclear. Last week EDF approved funding – only to be told the Government would need until September to review the plans further.
In a rare statement Chinese officials yesterday called for the Government to give Hinkley the goahead as soon as possible. Foreign ministry spokesman Hua Chunying said: ‘I would like to stress that this project was agreed upon by China, Britain and France in the spirit of mutual benefit and co-operation, and win-win co-operation, and has always had the strong support of Britain and France.’
She added that China ‘hopes that Britain can reach a decision as soon as possible, to ensure the project’s smooth implementation’.
The Hinkley project has been mired in controversy. Originally slated to cost £10billion, the Government claims it will now cost £18billion. But critics say the final bill for building the power station could reach £29billion. And while it is now planned to be up and running in 2025, this is several years later than originally promised.
There are further worries about the type of reactor because similar ones being built in Finland and France are years overdue and well over budget.
The project is also controversial because it is, in effect, being built by foreign governments. EDF is 85 per cent owned by the French state, while one-third of the cost is being provided by Chinese investors.
Meanwhile it has emerged that the French are expected to demand compensation for the £2.5billion they have already spent on Hinkley if the plans are scrapped.
A source told French newspaper Le Journal du Dimanche: ‘They would have to support the extra costs in case the negotiations are prolonged and the funds committed by EDF to prepare the site.’ EDF declined to comment.
LAST week, Theresa May took the difficult, but eminently sensible, decision to re- examine the multi-billion pound Hinkley Point nuclear power station deal.
Yesterday, China responded with what amounted to a veiled threat. Its official news agency – a mouthpiece for the State – warned the decision would ‘ stain Britain’s credibility as an open economy’ and could deter future investment.
Mrs May also had to endure a hissy fit from a junior Treasury minister, former Goldman Sachs banker Lord O’Neill – brought in by George Osborne – who was quite unreasonably upset that he hadn’t been consulted about the delay.
The Prime Minister should ignore the sabre-rattling from Beijing, and any moaning from her ministers, and take an entirely warranted, hard-headed look at whether the deal remains in Britain’s best interests.