China deal: Perhaps we are a Third World country, after all

These days, when I think of Africa, I think of China.

This ZeroHedge article and accompanying map of Chinese investments explain why.

Now they’ve started in earnest here in the UK, which leads me to believe that we have finally sunk to Third World status.

On October 21, The Guardian reported:

Britain is to embark on building its first nuclear power station for two decades on Monday as the coalition hands a multibillion subsidy to France’s EDF with help from a state-owned Chinese firm.

The new reactors at Hinkley Point C [West Somerset] will be capable of producing 7% of the UK’s electricity.

That’s enough leccy to supply five million homes.

Here are the details (emphases mine):

EDF was thought to have started negotiations demanding a figure of £100 [per megawatt], with the Treasury’s gambit being £80.

The price will fall to £89.50 if EDF presses ahead with a second plant at Sizewell, Suffolk. Chancellor George Osborne removed another obstacle last week when he announced that Chinese firms would be allowed to invest in civil nuclear projects in the UK.

Ministers will come under twin attack from green groups, both for endangering safety and providing subsidy, as well as from enthusiasts for shale gas for failing to put their faith in cheap gas, currently nearly half the cost of nuclear.

The energy secretary, Ed Davey, is preparing to counter green groups by arguing that onshore or offshore wind could not fill the energy gap created by the decommissioning of the first wave of power stations. By some estimates, Hinkley Point C will generate the equivalent output of 6,000 onshore wind turbines.

EDF’s longtime partner, China General Nuclear Power Group, possibly in combination with China National Nuclear Corporation, is expected to have a 30% to 40% stake in the consortium, with Areva taking another 10%, according to French weekend newspaper reports. The deal is thought to provide a 10% return on EDF’s investment.

Is this a Tory initiative?

The coalition policy is being led by the Liberal Democrats – the party that had, in principle, opposed nuclear power right up until its party conference in September.

Yet, Tories — namely George Osborne and Boris Johnson — are the front men for British government overtures to China.

And hardly anyone in the media is analysing what these could mean in the long-term for the UK. This appears to be a policy that suits both Left and Right.

The Telegraph‘s Iain Martin has these observations:

Am I alone in being deeply uneasy about some of what was announced last week? Should the British government really be gleefully selling off the UK – its infrastructure, land, houses and so on – to China? Is this wise?

Now the Chinese will even be allowed to own stakes in nuclear power installations in Britain. This is a country that spies on the UK, a lot.

As Jonathan Fenby noted the other day, it is one thing to have everything up for sale when it is a two-way street in terms of trade, with agreed rules and transparency. It is quite another for one country – the UK – to enthusiastically invite in another party – China – and say “take your pick” when China would never allow other countries the same commercial leeway on its home turf.

Five years on from the financial crisis, Osborne is also desperate for the the Chinese banks to do much more in the City of London. They were spectacularly bailed out by the Chinese government in 1999-2000 when they looked like falling over as a result of lax lending that made Fred Goodwin look like Mother Teresa. As the FT pointed out last week, incredibly the British government has promised these Chinese banks a special light-touch regulatory regime, with dispensations on the capital front. What could possibly go wrong?

A veteran observer of politics, who has seen governments come and go, put it well this weekend when we were discussing Osborne’s trip. “This China thing will come back and bite them on the bum,” he said. I suspect he’s right.

The October 20 edition of Sunday Politics (BBC) said that Boris wants more Chinese students in London, which goes against Theresa May’s policy of clamping down on dodgy student visa arrangements.

‘This China thing’ will end in tears.

4 comments for “China deal: Perhaps we are a Third World country, after all

  1. Furor Teutonicus
    October 27, 2013 at 7:52 am

    XX The October 20 edition of Sunday Politics (BBC) said that Boris wants more Chinese students in London, which goes against Theresa May’s policy of clamping down on dodgy student visa arrangements.

    ‘This China thing’ will end in tears.XX

    I would swap 2 Chinese for every muslim in Europe, personally.

    • October 28, 2013 at 1:33 pm

      It’s not the people I’m concerned about. It’s the government. What might they demand of us in future?

  2. Uncle Gus
    October 27, 2013 at 7:28 pm

    China never was a third world country, despite not being white and talking funny. It’s a deal of equals – except one of the equals has deep-sixed its education system and allowed itself to lose all its skills relating to nuclear start-ups.

    We could of course get back all our nuclear engineers working in foreign countries, but most of them are near retirement age and it would take longer and cost more.

    Previous governments have been very, very stupid, but they have merely started us on the long journey back to the caves. We’re nowhere near there yet.

    • October 28, 2013 at 1:32 pm

      My point was that China has been investing heavily in Africa — much of which is comprised of Third World countries — and now the UK. What does that say about us?

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