Hinckley Point C was part of EU-China Trade Relations so requires re-visiting in the light of the vote to Brexit. Brexit makes a huge difference to the terms of this deal. The bulk of the cost of Hinckley is financing the debt incurred by EDF with its Chinese partners. If the UK government were able to provide the finance for Hinckley Point it would only cost a half to a third as much. (See Kow-towing: politically risky and economically stupid.) Such State Aid would have fallen foul of EU competition rules in the deregulated electricity market, and hence forbidden, but the coming Brexit avoids these problems. It should be possible to remove the Chinese from the contract and halve the cost of the project.
However, even if the project is cheaper everyone knows that Hinckley Point C is absurd. The UK should build a smaller nuclear power plant at Hinckley Point to minimise the risk and use Government finance to do it without the Chinese.
(The article below was originally written in October 2015 but still applies)
As part of the negotiations for a China-EU Free Trade Agreement the EU has been making efforts to rebalance investment. Historically most investment was from the EU to China but now the converse is true and is being actively encouraged by the EU. China has about £3.5 trillion dollars of foreign exchange to invest.
"The ongoing negotiation of a bilateral investment agreement is the top priority towards this objective. Completing this agreement will support China’s reforms and would facilitate Chinese participation in the Commission’s investment plan for Europe as well as European participation in China’s ‘One belt, one road’ projects. " EU official document: Trade for All.
In Germany the Chinese Investment Corporation (CIC, China's State owned Sovereign Wealth Fund) is bidding around £3bn for Tank and Rast. In France and Belgium CIC is spending £1.3 bn on shopping malls. There are Chinese investments for a £100m+ here and there all over the EU.
Britain has hosted huge Chinese investment in its utilities infrastructure and expects over £100bn of investment by 2025. Britain has just concluded one of the largest China-EU investment deals. This involves a replacement for the Hinkley Point nuclear station. The primary investor is the French Government owned EDF (Electricite de France) and the secondary investor is the Chinese consortium of China General Nuclear and China National Nuclear Corporation.
The reactor is a design developed by a consortium of three companies: the French Government owned Areva NP, and Electricité de France, and Siemens AG, the corrupt German multinational. EDF has trained the Chinese in the construction of these reactors and they are now returning to Europe with this expertise:
"Construction of two more EPR plants has started in China at Taishan in 2009 and 2010, where Areva is working with China Guangdong Nuclear Power Company (the latter will operate the plant)."State Aid: Investment Contract for Hinkley Point C
China Guangdong has now changed its name to China General Nuclear and will be working at Hinckley.
The project has been approved by the EU Commission and the European Court of Justice despite numerous objections. Of course, a joint UK/France/Germany enterprise will always be approved by the EU Council under majority voting. The EU can approve massive state aid when several countries work together but does not approve even low cost rescues by single states of steelworks etc.
Britain has no need of this foreign investment, especially the French component, and it is damaging our economy, drawing in workers from the EU and creating an escalating trade deficit and primary income deficit with the EU - see The imbalance of eu-uk trade. Some sources say that 25,000 jobs will be generated by Hinkley but with UK unemployment at 5% most of these will be filled by personnel from the EU. What is good for the EU in general, especially Eastern Europe, is positively dangerous for Britain. The Chinese component of the deal will be less financially damaging than the French component because there is almost certainly a "quid pro quo" in terms of London hosting Chinese international banking.
A comment below has made the excellent point that had the UK government provided the finance for Hinckley Point C it would only have cost of as little as a third as much. (See Kow-towing: politically risky and economically stupid.) However, such State Aid would undoubtedly fall foul of EU competition rules in the deregulated electricity market and hence be forbidden.
See also:
http://ec.europa.eu/competition/state_aid/cases/251157/251157_1507977_35_2.pdf
http://ec.europa.eu/trade/policy/countries-and-regions/countries/china/index_en.htm
http://www.chinabusinessreview.com/a-boost-for-nuclear-power/
21/10/15
However, even if the project is cheaper everyone knows that Hinckley Point C is absurd. The UK should build a smaller nuclear power plant at Hinckley Point to minimise the risk and use Government finance to do it without the Chinese.
(The article below was originally written in October 2015 but still applies)
As part of the negotiations for a China-EU Free Trade Agreement the EU has been making efforts to rebalance investment. Historically most investment was from the EU to China but now the converse is true and is being actively encouraged by the EU. China has about £3.5 trillion dollars of foreign exchange to invest.
"The ongoing negotiation of a bilateral investment agreement is the top priority towards this objective. Completing this agreement will support China’s reforms and would facilitate Chinese participation in the Commission’s investment plan for Europe as well as European participation in China’s ‘One belt, one road’ projects. " EU official document: Trade for All.
In Germany the Chinese Investment Corporation (CIC, China's State owned Sovereign Wealth Fund) is bidding around £3bn for Tank and Rast. In France and Belgium CIC is spending £1.3 bn on shopping malls. There are Chinese investments for a £100m+ here and there all over the EU.
Britain has hosted huge Chinese investment in its utilities infrastructure and expects over £100bn of investment by 2025. Britain has just concluded one of the largest China-EU investment deals. This involves a replacement for the Hinkley Point nuclear station. The primary investor is the French Government owned EDF (Electricite de France) and the secondary investor is the Chinese consortium of China General Nuclear and China National Nuclear Corporation.
The reactor is a design developed by a consortium of three companies: the French Government owned Areva NP, and Electricité de France, and Siemens AG, the corrupt German multinational. EDF has trained the Chinese in the construction of these reactors and they are now returning to Europe with this expertise:
"Construction of two more EPR plants has started in China at Taishan in 2009 and 2010, where Areva is working with China Guangdong Nuclear Power Company (the latter will operate the plant)."State Aid: Investment Contract for Hinkley Point C
China Guangdong has now changed its name to China General Nuclear and will be working at Hinckley.
The project has been approved by the EU Commission and the European Court of Justice despite numerous objections. Of course, a joint UK/France/Germany enterprise will always be approved by the EU Council under majority voting. The EU can approve massive state aid when several countries work together but does not approve even low cost rescues by single states of steelworks etc.
Britain has no need of this foreign investment, especially the French component, and it is damaging our economy, drawing in workers from the EU and creating an escalating trade deficit and primary income deficit with the EU - see The imbalance of eu-uk trade. Some sources say that 25,000 jobs will be generated by Hinkley but with UK unemployment at 5% most of these will be filled by personnel from the EU. What is good for the EU in general, especially Eastern Europe, is positively dangerous for Britain. The Chinese component of the deal will be less financially damaging than the French component because there is almost certainly a "quid pro quo" in terms of London hosting Chinese international banking.
A comment below has made the excellent point that had the UK government provided the finance for Hinckley Point C it would only have cost of as little as a third as much. (See Kow-towing: politically risky and economically stupid.) However, such State Aid would undoubtedly fall foul of EU competition rules in the deregulated electricity market and hence be forbidden.
See also:
http://ec.europa.eu/competition/state_aid/cases/251157/251157_1507977_35_2.pdf
http://ec.europa.eu/trade/policy/countries-and-regions/countries/china/index_en.htm
http://www.chinabusinessreview.com/a-boost-for-nuclear-power/
21/10/15
Comments
https://radicaleconomicthought.wordpress.com/2015/10/21/kow-towing-politically-risky-and-economically-stupid/