UK resists Chinese pressure over nuclear deal but still wants close ties

LONDON/BEIJING (Reuters) - Britain said on Monday that it wanted closer ties with China but resisted pressure from Beijing to sign off on a $24 billion nuclear power project that was delayed at the last minute by Prime Minister Theresa May.

A sign marks the borders of the site where EDF Energy's Hinkley Point C nuclear power station will be constructed in Bridgwater, southwest England October 24, 2013. REUTERS/Suzanne Plunkett/File Photo

May’s decision to review the building of Britain’s first nuclear plant in decades has raised concerns that her government could take a sterner view of Chinese investment, potentially souring ties with the world’s second largest economy.

Chinese Foreign Ministry spokeswoman Hua Chunying said they had “noted” the British decision to conduct a review and called for the project to go ahead.

China “hopes that Britain can reach a decision as soon as possible, to ensure the project’s smooth implementation”, she added, without elaborating.

Under plans drawn up by former prime minister David Cameron, French utility EDF and Chinese partner China General Nuclear would fund the $24 billion cost of the project, while Britain committed to pay a minimum price for the power generated by the plant for 35 years.

The Hinkley financing deal was agreed during a state visit by President Xi Jinping last year designed to cement a “Golden Era” of relations between the two countries. Britain also sought Chinese investment in rail and other projects during the visit.

But after winning Britain’s top job in the political turmoil following the June 23 Brexit vote, May’s decision to review the project indicates a much more cautious view of Chinese investment and a willingness to take a tough line with EU allies such as French President Francois Hollande.

Hinkley is seen as the frontrunner to closer Chinese nuclear involvement, paving the way for another project in Britain that would use Chinese nuclear technology.


May’s spokeswoman said nuclear power remained an important part of Britain’s energy supply plans, and it was natural for the incoming government to want to look at the plans in detail.

“This is a big infrastructure decision and it’s right that a new prime minister and a new government take the time to make sure that they are fully informed before they take that decision,” she said. “The government will make a decision in September.”

She said that Britain still wanted to attract foreign investment and valued its ties with China.

“With the role that China has to play on world affairs, on the global economy, on a whole range of international issues, we are going to continue to seek a strong relationship with China,” she said.

The Financial Times reported that high-profile Treasury minister Jim O’Neill, an influential former Goldman Sachs economist brought into government to promote ties with China, was baffled by a change in approach and could quit the government.

May’s spokeswoman said O’Neill still had a role to play in government.

A former colleague of May said on Saturday she had previously expressed concern about the security implications of the planned Chinese investment.

Last year, Nick Timothy, now May’s joint chief of staff, said security experts were worried the state-owned Chinese group would have access to computer systems that could allow it to shut down Britain’s energy production.

Asked whether national security would play a part in the review of the Hinkley Point nuclear project, the spokeswoman declined to comment on the review process, other than to say that it would look at all component parts of the deal.

China’s official Xinhua news agency published an English-language commentary saying China would not tolerate “unwanted accusations” about its investments in Britain. Xinhua said people might think Britain was trying to erect a wall of protectionism.

This “will surely stain its credibility as an open economy and might deter possible investors from China and other parts of the world in the future”, read the commentary, which is not a government statement but offers a reflection of official thinking.

Asked about the commentary, May’s spokeswoman said the government could take time to reach its final verdict.

“The prime minister’s focus is about making sure that we take the right decision; recognising that we need a reliable and secure energy supply, recognising that nuclear energy is an important part of that and recognising that we can take some time to make that decision,” she said.

She said she was not aware of any direct communication between May and China over the review.


EDF said it had already spent 2.4 billion pounds on Hinkley Point so far but declined to comment on whether there are any contract clauses specifying possible damages in case of withdrawal of the British side.

The cost of the Hinkley project has already come under scrutiny, with British lawmakers warning that the energy price guaranteed by the government is too high, and union officials saying the up-front costs could jeopardise EDF’s future.

The EDF board voted narrowly to proceed with the project last week.

A spokeswoman for Britain’s Department for Business, Energy & Industrial Strategy said on Monday the government is not responsible for any costs until a contract is signed.

French Economy Minister Emmanuel Macron told French weekly Le Journal du Dimanche on Sunday that he did not believe Britain would reverse its position.

Additional reporting by Susanna Twidale and Nina Chestney in London and Geert De Clecq in Paris; editing by Guy Faulconbridge and Anna Willard