After saying it “respected” PM May’s decision to conduct a review of the Hinkley Point nuclear reactor project, the Xinhua Official News Agency made some very undiplomatic remarks about the prospects for future friendly relations with the UK, and said failure to move ahead with the project could harm trade deals between the UK and China.

China Says Postponement of a Decision for Hinkley Point is Bonkers

China’s official news agency sharply questioned the British government’s postponement of approval for the Hinkley Point nuclear power station, saying it cannot risk driving away Chinese investors.

A commentary published by Xinhua, which is a source of official government information, said initially last week that China understood and respected Britain’s requirement for more time to think about the deal.  This week it appears the government has radically changed its mind.

The Chinese statement said that it would not tolerate “unwanted accusations [over security] about its investments in Britain, a country that cannot risk driving away other Chinese investors.”

“However, what China cannot understand is the ‘suspicious approach’ that comes from nowhere to Chinese investment. The British government is actually running the risk of dampening the hard-won mutual trust with China. For the UK which is striving to pull itself out of the Brexit aftermath, openness is the key way out.”

The Xinhua commentary also accused the UK of “erecting a wall of protectionism.” It ran on with a number of negative comments suggesting that relations between the two countries might be harmed if May does not approve the project.

Theresa May, the prime minister, is understood to be concerned about the security implications of a planned Chinese investment in Hinkley and has delayed giving the $24B project the green light.

When the deal with China was first aired in 2015, it included a provision for CGN to provide some of the long lead time components for the plants. The design of the Areva EPR is no secret to China as two of the reactors are nearing completion in Taishan, China.

China’s other UK nuclear project at risk

China has staked an enormous amount of political capital on the UK deal. In addition to the Hinkley Point project, in a visit to the UK last October, Chinese President Xi Jinping and UK PM David Cameron agreed to two other nuclear reactor deals.

The Sizewell project will also include two Areva EPRs. CGN has agreed to take a 20% equity stake in the project which could cost between $15-20 billion. EDF would cover the rest.

More importantly, CGN has a commitment from the UK to build two new Chinese designed 1000 MW PWR type reactors, known as the Hualong One, at the Bradwell site. While no timeline is in place for this project, it represents a major accomplishment for China which developed the Hualong One for export.

CGN would take a 66% equity stake in the project essentially self-financing its export product. EDF would cover the rest.

China has the expectation that the prestige of  completing the Bradwell project would set the stage for export orders from other countries. It’s ambitions might be thwarted if the Hinkley project, and the two projects that follow it, are cancelled or if China is cut out of participating in them. This prospect is what has the country’s top leaders socks in a knot and most likely accounts for the remarkably intemperate and even hostile language in the Xinhua commentary.

UK not stirred by China’s upset

Reuters reports that PM 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.

Treasury official kept in dark

In other developments, the Telegraph newspaper reported on 8/2/16 that Jim O’Neill, the Treasury Minister, was considering quitting the government over May’s decision not to approve the EDF contract. He said that he was given no warning about her decision.  O’Neill, a holdover from PM Cameron’s government, had spearheaded building relations with China which led to CGN’s commitment to take a 33% equity position in the Hinkley Point reactor project.

UK nuclear build may be stretched out

The delay in starting the Hinkley Point project may produce a traffic jam in terms of demand for concrete, steel, and especially skilled workers about 2019 when two other reactor projects, 2 ABWRs and 3 AP1000s are also slated to break ground. Exactly how much financing will be available for all of these reactors starting at the same time is also a question.

Given all of these factors, there is a possibility the schedule for the UK new build will be stretched out into the 2030s before all 19 GW are completed and in revenue service.

Poland revives nuclear power plant plan

Reuters reports that Poland plans to revitalize a plan to build its first nuclear power plant with capacity of 1000 MW in the next 10 years, its energy ministry said. However, that one plant won’t make much of a difference in terms of the country’s CO2 emissions.

Poland, which generates most of its electricity from highly polluting coal, launched the project in 2009 launched but it hit numerous delays due to falling power prices and Japan’s 2011 Fukushima nuclear accident, which drained public support.

In the coal-fuelled power plants” will remain Poland’s major source of energy, the ministry also said.  Poland has five projects to build coal-fuelled generation units totaling 5 GW. The energy ministry said Poland needs three more coal-based units for its energy security.

Poland’s installed power capacity amounts at around 40 GW, most of which is coal-fuelled power plants.

# # #