the times | Saturday December 4 2021 55

Business

Dominic O’Connell

The China conundrum: how to act

tough but still get its nuclear plants

new plant at Sizewell in Suffolk,

which it intends to be a replica of the

Somerset plant. Most importantly,

CGN plans to build a plant of its own

design at Bradwell in Essex, about

60 miles from the centre of London.

The Chinese design, for a plant called

the HPR-1000, was submitted to

British regulators for approval in 2017

and insiders say that it could receive

the green light as soon as next month.

That approval would be a huge fillip

for Beijing, representing the first time

that a western nuclear regulator has

given a clean bill of health to a

Chinese design. Industry experts say

it could open the door to a flood of

export orders as more countries turn

to nuclear power as a way to cut

carbon dioxide emissions.

The government obviously has now

decided that this level of Chinese

involvement in one of Britain’s key

industries cannot continue. Several

stories have appeared about ministers’

intention of taking a strong line and

kicking out the Chinese. There has

been no action, however, even when

there was the opportunity to do

something alongside the big energy

and climate change announcements

of the past few months. There are, I

am told, talks going on, with officials

trying to work out how to push the

Chinese out without endangering

progress on new nuclear.

All this was something of a ghost at

the feast at the Nuclear Industry

Association’s annual conference,

which I strolled along to on Thursday.

Greg Hands, the energy minister,

praised the industry, eulogised the

government’s support for it, made a

joke about Peppa Pig and had a dig at

the Green Party. But he made no

mention of what the government

intended to do about China, although

there was a passing reference to the

America, Henry

Kissinger said, has

no permanent

friends or enemies,

only interests. This

was a distillation of his hard-headed

approach to international affairs,

where what mattered was strategic

goals, power and money, not some

higher ideological purpose. He was,

probably unwittingly, echoing the

words of Lord Palmerston, the

statesman who said that Britain had

“no eternal allies and we have no

perpetual enemies. Our interests are

eternal and perpetual and those

interests it is our duty to follow.”

Those words might now be ringing

in the ears of the government’s

diplomats and business advisers, who

have a difficult task in front of them:

negotiating a deal that will boot

China out of its present strong

position in Britain’s programme to

build a new generation of nuclear

power plants.

It is, as Sherlock Holmes might say,

a three-pipe problem. Only a few

years ago, Britain’s leaders cuddled

Beijing close as a means of

kickstarting new nuclear. Now, after

Huawei, Hong Kong and the

continued scrutiny of the treatment

of Uighur Muslims, China is again the

enemy. Richard Moore, the head of

MI6, warned this week that it posed

one of the greatest threats to our

national security.

Given MI6’s assessment, it might

surprise many to realise just how deep

China’s influence reaches into the

nuclear programme, which is one of

the key strands of the government’s

plan to achieve net zero carbon

emissions by 2050. George Osborne

struck a grand deal with Beijing in

2013 when he was chancellor,

announcing on the final day of a

trade visit to China that its companies

would be allowed not only to invest

in UK power stations but also to

control them.

The Chinese were not slow in

taking up the invitation. CGN, a

state-owned nuclear power company,

took a one-third stake in EDF’s new

plant at Hinkley Point in Somerset.

The intervention was crucial in

getting the project off the drawing

board and into construction. EDF

might have struggled to finance it

alone and at that stage the Treasury

was wary of putting in its own money.

CGN also has an option to take a

20 per cent stake in EDF’s proposed

Markets are

madder than

ever, says

Munger, 97

Tom Howard

One of the world’s most widely respec-

ted investors says that stock markets

are out of touch with reality after their

post-pandemic surge.

Charlie Munger, the 97-year-old

vice-chairman of Berkshire Hathaway

and the right-hand man to Warren

Buffett, the renowned billionaire stock-

picker and dealmaker, said that the

market was “even crazier” now than it

was during the dotcom boom of the late

1990s, which preceded a crash.

At a conference in Sydney yesterday,

Munger said: “Some of the valuations

we saw in the dotcom boom were

higher, but overall I consider this as

being even crazier than the dotcom

boom, which blew up in 2000.” The

Financial Review in Australia first

reported his comments.

On Wall Street the S&P 500 has

doubled in value since last spring’s

crash. So far this year nearly $900 bil-

lion has been poured into equity funds,

according to Bank of America, more

than in the previous 19 years put

together.

Munger said that many US stocks

were trading on a price-to-earnings

valuation of 35 times or more, well

above historic levels. He and Buffett, 91,

are known for searching Wall Street for

stocks that they feel have been unfairly

neglected by the wider market. How-

ever, he said it was becoming increas-

ingly difficult to find a solid business at

a fair price. “You have to pay a great deal

for good companies and that reduces

your future returns,” he said.

He praised China’s authorities, which

have made moves this year to try to

temper prices of everything from stocks

to commodities to property. He said

that the United States was “inferior to

China” when it came to trying to rein in

markets. “They’re right to step out, step

hard on booms and to not let them go

too far. They’re acting in a more adult

fashion,” he said.

Munger also backed China’s

approach to cryptocurrencies, which

he dislikes. “I wish they’d never been

invented,” he said. “Again I admire the

Chinese, I think they made the correct

decision, which was to simply ban them.

In my country, English-speaking civili-

sation has made the wrong decision, I

just can’t stand participating in these

insane booms.”

He also questioned the intentions of

cryptocurrency investors who, he said,

were only “thinking about themselves

... Just look at them. I wouldn’t want any
one of them to marry into my family.”

new National Security and

Investment Act, which gives ministers

wide powers to intervene in business

on national security grounds.

Less than two hours later, Zhu

Minhong, CGN’s UK chief executive

took the stage. The HPR-1000 design,

he said, was “in the last lap” with the

British regulator and so far “there

have been no technical show stoppers

— no issue that could prevent

issuance [of final approval]”. He also

outlined the Bradwell plans, saying

that initial work was going well and

that a seismic survey had proved the

site’s suitability. Zhu may have been

alluding to the diplomatic kerfuffle

when he urged the industry to “keep

calm and carry on”.

How might Kissinger or Palmerston

have resolved the impasse — the

desire to go as fast as possible on new

nuclear, yet to get rid of what you

believe to be a clear threat to national

security? There are, as nuclear

industry sources have pointed out to

me, some complicating factors. Not

only is CGN a big investor at Hinkley

Point, but it is also the only company

in the world to have built and

operated the type of reactor under

construction there. It is a French

design, but the other two early

projects, at Flamanville in France and

Olkiluto in Finland, are years late and

billions over budget. CGN has it up

and running and has had problems,

one unit being shut down because of

issues with fuel rods. If you were keen

to have the first new atomic power

plant in Britain built properly, on

time, on budget and with some

lessons from earlier attempts,

wouldn’t you want CGN on board?

The final solution may be, to follow

Kissinger’s lead, something that meets

some of the interests of both sides.

CGN could stay in at Hinkley Point

but be persuaded to give up its stake

in Sizewell C, a move that would

allow British politicians to beat their

chests on how they were being tough

with China. CGN would get what it

really desires, the British seal of

approval on its home-grown reactor

design. And the Bradwell plant? That

could just sit and wait, ready either to

be passed to another

developer or to go

ahead once Britain’s

interests have

shifted again.

‘‘

’’

Dominic O’Connell is business

presenter for Times Radio