Hinkley Point: Britain should not chase Chinese investment at the expense of its national security
Unlike in the UK, students in China are taught about the Opium Wars, the burning down of the Qing Dynasty’s Old Summer Palace, and successive decades of western interference in Chinese affairs. The official People’s Republic of China history of the nineteenth century is called The Century of National Humiliation, accompanied by a handy Dictionary of National Humiliation.
This history is important to China’s leaders, and is one of the reasons why the British government’s delayed action on developing a major power station with Chinese help will be seen as a very public rebuff. Under current proposals by French energy firm EDF, the power station at Hinkley Point C would provide around 7 per cent of the country’s energy needs and create 25,000 jobs at its peak. Two Chinese companies, the Chinese National Nuclear Corporation and the China General Nuclear Power Group, will part-finance the project, which is due for completion in 2025.
The Prime Minister has taken the decision to review the project, with concerns over Chinese involvement in critical national infrastructure known to be one of the issues being raised. To be apparently snubbed by the UK will do China’s global reputation, and our trading relations with that country, no favours at all.
Despite all this, it is absolutely the correct decision to have this recent pause and review over the Hinkley Point C project.
The Institute for Statecraft has described China’s investment in other countries as “the single most important tool for strategy”. Here in our House of Commons, the Intelligence and Security Committee (roughly equivalent to the US Senate Select Committee on Intelligence) has warned about the “disconnect between the UK’s inward investment policy and its national security policy”. The ISC was highly critical of the government when it allowed the Chinese telecoms giant Huawei to bid for contracts in 2013, saying “the government’s duty to protect the safety and security of its citizens should not be compromised by fears of financial consequences”.
Look at what we have learnt since the Prime Minister initiated the review. The China General Nuclear Power Company has been charged with nuclear espionage in the United States for allegedly developing nuclear material without US approval. In its indictment, the US Justice Department explicitly stated that the company had acted “with the intent to secure an advantage to the People’s Republic of China”. This company has a 33 per cent stake in the Hinkley Point C project.
China sees investing in foreign infrastructure as a strategic imperative (Source: Getty)
The US is far stricter than we are about involving China in its critical national infrastructure. This is not about superpower posturing. They have taken a far more long-term strategic approach to China than the business-at-all-costs approach set out by Cameron and Osborne during the last government.
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Regulators in the States have acted to prevent Huawei from providing equipment in their national network as they could not guarantee the long-term security of their critical national infrastructure in the event of a dispute with China. More recently, the Committee on Foreign Investment in the United States announced that it would investigate a $3.8bn investment in data storage group Western Digital by Tsinghua. The state-controlled technology firm that was attempting the bid dropped the deal immediately on the news that it would be looked into.
We need to apply a similarly robust attitude in the UK. Would Chinese authorities seriously consider shutting down nuclear power stations in the event of a dispute with the UK? Probably not. But given that we know China invests strategically in critical national infrastructure around the world, is it really prudent to put ourselves in a position where their investments might be used as leverage in the future?
Almost a year ago, I raised these concerns with the Prime Minister and the then energy secretary, as well as holding a private seminar with my colleagues in Parliament and experts from industry and diplomacy. Chinese companies with close links to the Chinese state have already gained a considerable foothold in our industries, including car-making, utilities and TV programme making. A close trading relationship with China is desirable, but one that overlooks our national security concerns is not.