China’s President Xi Jinping’s visit to the UK has been greeted with a flurry of announcements by the government on multi-billion pound deals with China.
Currently, the government is claiming that £40bn of deals have been struck during the course of the visit, although the Financial Times this week has noted that these appear subject to “inflation”, with the double-counting of existing deals bringing the total closer to perhaps £25bn.
Either way, the sums involved are huge – but also controversial. Chancellor George Osborne has sidelined commentary on China’s human rights record. In being so welcome to Chinese investment, he is breaking the Western consensus that has been generally wary about allowing China into critical infrastructure projects, such as nuclear power.
Britain had angered its closest partner, the US, earlier this year by signing up to China’s new Asian Infrastructure Investment Bank (AIIB), perceived by Washington – correctly – as an attempt to provide an alternative to the World Bank and IMF, free of US influence.
Chinese investments announced so far include large sums for Rolls-Royce aero engines, cruise ships, and sales of liquefied natural gas. But the critical announcement is funding for Hinkley Point C, a new nuclear power plant in Somerset. China’s state-owned General Nuclear Power Corporation has pledged £6bn towards the cost of building this.
However, France’s 85% state-owned EDF will provide the rest of the £12bn needed, with the £18bn total making it arguably the most expensive power plant ever built.
To secure this funding for a high-cost, long-term project, the government has promised exceptional returns. Electricity from Hinkley Point C will be sold at £92.50/MWh. This is double the current wholesale market price for electricity. This offer is so generous that the Austrian government is taking the British government to the European Court, claiming this exceptional promise breaches the EU’s “State Aid” rules.
daily alternative | alternative news – Why the UK government is so interested in China