More discriminatory moves against Chinese firms will sour China-UK economic ties
Published: Jul 26, 2021 08:53 PM
Illustration: Chen Xia/GT

Illustration: Chen Xia/GT

The UK is reportedly considering ways to remove China's nuclear energy company China General Nuclear Power Group (CGN) from its future power projects. "It's a further sign that relations between the countries are deteriorating," Bloomberg reported.

Bilateral collaboration on a nuclear power station was once a showcase project in the "Golden Era" in ties between the two countries. Yet in last July, there were reports that nuclear power may be the next area facing political interference by the UK government after its arbitrary Huawei ban, a turning point for China-UK ties.

Affected by factors including the US influence, the UK, which at one time promoted economic and trade cooperation with China according to rules of free market economics, is increasingly using national security guises to strengthen the scrutiny of China's investments.

It's currently only another round of hype among foreign media outlets, but if the UK government takes actions on CGN, it would further hurt bilateral economic ties and cause severe cost to UK itself.

The Financial Times reported that the possible removal of CGN from UK' nuclear project could "help attract North American infrastructure investors". Similar to US' opposition to Germany's Nord Stream 2 gas pipeline project with Russia, the US may hope the UK could remove CGN from its nuclear projects and let US companies such as Westinghouse Electric enter the UK market. 

For the UK, if it follows the US' lead further politicizing economic and trade ties with China, it will hurt its own economic interests and business environment. 

According to Bloomberg, projects potentially at risk include the 20 billion-pound ($27.5 billion) Sizewell C nuclear power station. If the UK removes Chinese companies from contractually-bound cooperation projects, British companies will face Chinese company's claims for compensation in accordance with UK and international law. Moreover, British companies have already made a lot of investment in this project. And if there are political manipulations, China also has many strong anti-sanction measures.

In response to the news of the UK eyes to remove CGN from energy plan, a spokesperson of China's Foreign Ministry on Monday said that China and the UK are important trade and investment partners, and pragmatic cooperation based on the principles of mutual benefit and win-win cooperation is in the interests of both sides. The UK side should provide Chinese companies with an open, fair and non-discriminatory business environment.

China-UK business ties is of particular importance for the UK in post-Brexit and post-COVID era as it is essential for UK to expand cooperation with the world's second-largest economy to cushion its withdrawal from the EU and boost its recovery. 

According to media reports, China has overtaken Germany to become the UK's biggest single import market. Goods imported from China rose 66 percent from the start of 2018 to 16.9 billion pounds ($24 billion) in the first quarter of this year. Imports from Germany fell by a quarter to 12.5 billion pounds in the same period. The change came as trade with the EU was disrupted by Brexit and the pandemic boosted demand for Chinese goods, the BBC reported.

Despite the US influences, the UK government has taken a relative pragmatic approach in dealing economic cooperation with China. UK Prime Minister Boris Johnson recently said that he did not want to drive Chinese investment away from Britain because of an "anti-China spirit." It is hoped that British business and legal circles can unite to expose the damage of protectionism to the investment environment and maintain the normal economic and trade exchanges between China and UK.

The author is Jean Monnet chair professor and director of the Center for EU Studies at Renmin University of China.

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