Tuesday 22 September 2015

Osborne: Bull*** in the China Shop

Nobody, I suppose, objects to a trade delegation to Beijing.  One gathers the Chinese are buying fewer of our luxury exports these days, and are busily dumping surplus steel on us.  But maybe Osborne and his party can have a beneficial impact on the terms of trade*. 

Maybe.  It's more likely the diplomats in the entourage will be taken aside by their Chinese hosts to be instructed carefully on how Xi is to be given princely treatment when he arrives for his state visit.  No problems, we are good at that sort of thing, they'll all be gobsmacked by their Royal reception: we still know how to show a bit of palatial leg.  That might even, quite genuinely, win us some crumbs from the table, such is Chinese enthusiasm for hi-vis global prestige. 

Otherwise China is only really interested in the strategic stuff, which is where the nuclear nonsense comes in.  Aside from Osborne himself and sections of the ever crumb-craving UK engineering industry (most prominently the civils, because we probably will get the earth-moving contracts), is there anyone in the country who supports the Hinkley deal?

It's all entirely predictable.  Osborne, I suppose, is broadly in favour of remanining in the EU, but can't have too many illusions as to what that is really worth to us, nor as to the downsides that may come from that quarter.  If he sees the 2020s as his decade he'll be wanting more to occupy him than just endless fights over euro-regulation of the City, and Britain's (or indeed England's) contributions to GreekBailout5, or RefugeeInflux7.  He may also be planning to break euro-ranks at the Paris Climat thing later this year (blogpost to come on this) - another reason to keep onside with China.  Hedging the bets he makes - with our money.

So far, so realpolitik.  We were always a prgamatic trading nation, always going to turn our eyes eastwards, and our outstretched hands.  The only hope is, we are just about bouyant enough now that the terms won't be too utterly ghastly.  One day, they might be.

*But his choice of words could be better, no?  "We shouldn't be running away from China - we should be running TO China!"   Nul points for whoever made that up


Electro-Kevin said...

I wouldn't rule out Osborne being PM sooner than we think.

If Hague was deemed unfit to be PM because he wore a baseball cap on a rollercoaster, Miliband was deemed unfit because he couldn't eat a bacon sandwich then what are we to make of ...

"I will not dignify that accusation with a response" is up there in slipperiness with "I WILL NOT PAY THE EU DEBT on December the 1st" and "WE WILL REDUCE IMMIGRATION from outside the EU"

I expect the next History of Britain will be written in Chinese.

rwendland said...

I wonder what secret deal/promise has been done over the CfD price for the 3(?) Chinese Hualong One reactors to be built at Bradwell, Essex.

We have a ridiculous amount of nuclear power lined up for the future now. About a third (winter) to a half (summer) of UK consumption by my estimation, at twice+ the going price if the implied CfD price promises are kept. That's going to place UK electricity prices above most of the EU for 35 odd years - surely not an avowed Osborne desire?

Here's an update on my table of what is coming down the road:

1.2 GWe Sizewell B (60 year life extension taking this to 2055)
3.2 GWe EDF+China Hinkley Point C (2 EPR @1.6GWe)
3.3 GWe Toshiba/NuGeneration (3 AP1000 @1.1GWe near Sellafield)
6.7 GWe Hitachi/Horizon (5 ABWR @1.35GWe at Wylfa and Oldbury)
3.4 GWe China (guess: 3 Hualong One @1.15GWe at Bradwell)

17.8 GWe TOTAL, around a third of UK winter production, half summer

(Russia also wants to build some VVERs given UK CfD prices, but that is unlikely to fly in current politics.)

Will the govt UK nuclear lobby disappoint one or more of these companies they have led up the garden path?

Besides the price, we will have a vast range of different types of reactor, which is not a rationale engineering decision for a single country. Some diversity yes, but a few of nearly every type available in the world??

CityUnslicker said...

rwe - blimey, it is worse than I had imagined. Most of these new nucs are 'prototypes' too. Nobody sensible buys a prototype power plant of any type; a nuc one, doubly so....

rwendland said...

CU - it looks a nightmare, and virtually no-one is writing about it AFAICS.

Toshiba spent £700 million buying UK Horizon Nuclear Power + continuing spend, and Hitachi have spent many hundreds of millions developing UK NuGeneration. We're not talking cheap sales pitches here. So they are going to be mightily pissed off if the govt reneges on any implied CfD promises made to them.

We should have told EDF to get lost with their super-expensive, rather close to unbuildable, EPR. Then got the rest of them to bid with lower generation prices. That seemed to be the easiest way to get out of this sticky wicket with least expense and embarrassment.

I guess we can hope our nuclear regulator develops a large backbone and rejects some of these designs as not safe enough for the crowded UK. The Hitachi ABWR is after all just a modernised Fukushima BWR design!

rwendland said...

... just read that EDF CEO has recently raid said a "New Model" EPR design is being worked on to be "easier and cheaper to build", ready for ordering 2020-ish, which EDF hope to build in France.

So the UK gets the last 2 of the over-complicated crappy design built at CfD expense, but France will wait for a better design before EDF will build any more at their own expense! Smart move for the French, but we are screwed over! Another win for the UK nuclear lobby.