Britain's China Syndrome

Had Labour done it, the Tories would be screaming bloody murder. I am, of course, talking about the deal with the Chinese to build two nuclear power stations. If the Tories really were standing up for Britain, from a national security perspective it beggars belief that key national infrastructure be handed over to a power they would ordinarily be opposed to. But these are not ordinary times, and for Dave and Osborne, they are quite prepared to do anything to be China's best friend in the West.

On the nuclear deal itself, it's absurd on two levels. First is on the nuts and bolts of nuclear energy generation. In recent years, governments of all stripes and "reformed" environmentalists have green washed nuclear. It's reliable, they say. It's carbon-free, they say. It's sustainable, they say. On all three they're plain wrong. Conventionally mined uranium has, depending on who you ask, between 90 to 200 years worth of stocks left, assuming energy consumption stands still. Which it doesn't. Of course, getting that stuff out of the ground in the first place, transporting it across oceans, and refining it to be reactor-ready is hardly an emissions-free process either. And sustainable? If you can sort out the supply and ensure they remain safe (pray for no more Fukushimas), there's only so many places you can store spent fuel rods, irradiated water, and other by-products for the requisite 50,000 years or so.

Second is the taxpayer subsidy destined to end up in China's bank accounts. 10 years from now, if all goes according to plan, the new Hinkley Point plant will come on stream at the cost of some £25bn. The largest inward investment ever, except the government is acting as guarantor of a fixed energy price. Regardless of what's happening in the markets - you know, those very things Tories ordinarily bow and scrape toward - EDF, the French state company fronting for the Chinese, are guaranteed a floor price for their electricity regardless how low wholesale prices may plunge. In effect, the taxpayer is guaranteeing the investment. But it's not a public subsidy, you understand. The government are very much opposed to those. Meanwhile the vast potential of wind and wave, particularly around the northern quarters of these isles, remain untapped.

Why is this happening? Uncharacteristically, the government have played this straight. They want to be China's best buddy in the West. When their currency becomes fully convertible the Tories need the City of London to be the primary clearing house for capital flows. While London is ideally located between the stock markets of the East and North America, there isn't an exchange in Europe who'd turn down the chance to be the preferred partner of the Chinese government. And, as we've noted before, it helps support a key prop of the Tory base. Naturally, there are many other investment opportunities in Britain for footloose Chinese capital. Osborne has already mentioned the HS2 debacle. Again, billions earmarked for a useless piece of infrastructure from government coffers is a guaranteed return for anyone investing in it. There will be plenty of other opportunities.

Politically, being the number one investment destination for China in the West will help the British economy grow - and if you're a GDP fetishist like the Chancellor those numbers are the only ones that matter. It also allows for infrastructure spending to take place without blowing holes in his deficit and debt reduction schemes, and also allows Dave and successor to stride about the world stage as if Britain matters. We've sucked up to one global hegemon since 1945, so why shouldn't we carry bags for the next one too?