George Osborne urges China to back more UK major projects

Osborne: UK Guarantees £2bn for Hinkley
Osborne: UK Guarantees £2bn for Hinkley

Chancellor George Osborne is pushing for greater Chinese involvement in major UK infrastructure projects, after announcing a £2 billion Government guarantee to underwrite Beijing's investment in a controversial nuclear power plant.

Mr Osborne said he hoped the guarantee would pave the way to a final investment decision on the Hinkley Point C plant later this year by French company EDF, supported by China General Nuclear Corporation and China National Nuclear Corporation.

And he made clear that further sums may be made available in the longer term.

EDF Energy announced earlier this month that construction of the UK's first new nuclear plant in 20 years had been delayed and the Somerset facility will not start generating power in 2023 as planned.

The company's chief executive Vincent de Rivaz hailed Mr Osborne's announcement "as a clear sign of the Government's commitment to Hinkley Point C".

The project is likely to be discussed at the UK-China Economic and Financial Dialogue, being co-chaired by Mr Osborne and Chinese vice premier Ma Kai in Beijing, and there are hopes that a final decision may be made in time for President Li Xinping's state visit to Britain next month.

Mr Osborne has vowed to use his five-day visit to China to show that the UK is the east Asian giant's "best partner in the West", and the Beijing talks are likely to focus on the potential for further Chinese investment in projects like power stations and high-speed rail links.

He said he hoped a successful conclusion to the Hinkley Point deal would open the door to "unprecedented" UK-Chinese collaboration on power station construction.

The Chancellor will use a high-profile speech on Tuesday to offer an upbeat assessment of China's potential to drive momentum in the global economy, despite the recent slowdown in its GDP growth, wild price swings in its financial markets over the summer and an unexpected currency devaluation last month.

Speaking at Shanghai's Stock Exchange - a venue specifically chosen by the Chancellor to counter Western nervousness about China's financial position - Mr Osborne will restate Britain's determination to continue to seek closer economic ties.

"Of course there have been ups and downs," said the Chancellor. "But in our estimation, the spillover effects - the impact of that on other financial markets - has been relatively limited.

"If you look at the broader picture in China, even if it is not growing by double digits in the way it once did, it is still creating an economy the size of the UK over the next five years, so it is a massive source of global growth going forward."

Mr Osborne said his message to China was: "Carry on with the reform, carry on with the change you are making ... You will get big movements in the stock markets but it is important to keep your eye on the bigger picture and the bigger prize, that this period of economic reform can lay the foundations for Chinese prosperity for decades to come.

"We are very supportive of the economic reforms that the Chinese government have talked about."

Announcing the initial Government guarantee for Hinkley Point C, near Bridgwater, Mr Osborne said that new nuclear power was "essential" to ensure the lights stay on as Britain's ageing nuclear and coal plants are retired over the coming 10 years.

Energy Secretary Amber Rudd, who is part of a large delegation of ministers and business executives accompanying the Chancellor in China, said the new reactor facility could create 25,000 jobs across the UK.

The Government expects it to supply 7% of the country's electricity needs, powering around six million homes.

New nuclear power was "a vital part of our long-term plan to provide secure, clean energy supplies that hard-working families and businesses can rely on in the decades ahead", said Ms Rudd, who welcomed the guarantee as "an important step forward for the first new nuclear power station in a generation and the future of our home-grown energy supplies".

But Greenpeace UK chief scientist Doug Parr dismissed the guarantee as a "PR smokescreen" to hide the reality that Hinkley Point is "bogged down in a swamp of troubles".

Dr Parr said: "Hinkley hasn't got funding or safety clearance, and everyone outside the nuclear industry and our blinkered Government thinks it's absurd.

"For all his obsession with fiscal responsibility, George Osborne is signing up the country for the ultimate rip-off deal."

The GMB union welcomed the financial guarantee, but warned it should not be linked to a green light for the use of Chinese nuclear technology at Bradwell in Essex.

GMB national secretary for energy Brian Strutton, national secretary for energy at the GMB union, said: "Chinese nuclear technology is unproven and no UK government should even consider allowing it to be used in a new nuclear power station 60 miles from London.

"We have the technology and funding in the UK and MPs must insist that the UK Government goes ahead with that."

After his speech in Shanghai, Mr Osborne's trip takes him to little-known but fast-growing cities in China's interior, including Urumqi in the western Xinjiang province and Chengdu, in Sichuan.