As China buys into ‘The Most Expensive White Elephant in British History’ we explore what it might mean for Scotland.
This must be a poignant moment for the Chinese people. Just over 150 years after Britain humiliated China in the Second Opium War, forcing them to accept our narcotics imports, the British Government has been reduced to kowtowing as though its life depended on it.
The crown jewel of this week’s trade deals is meant to be the bizarre decision to give a Chinese state energy company a 1/3 stake in the new Hinkley Point C nuclear reactor. 2/3 owned by the French state energy company EDF, it isn’t so much a Private Finance Initiative as a Foreign Governments Finance Initiative. Hinkley Point is massively expensive, with a 35-year contract guaranteeing the electricity will be bought at around double the current wholesale price. The only two other reactors built to this design have run over budget and over time, and both remain unfinished.
Furthermore, Hinkley Point is a serious problem for Scotland. The Scottish Government’s economic strategy is to transfer our world-leading marine engineering skills from oil to offshore wind. With 1/4 of Europe’s wind energy potential, and interconnectors to Norway and perhaps even Canada being planned, renewable energy could be a goldmine for Scotland – and give us real economic independence from Britain. Unfortunately for us, nuclear is the hardest power source to combine with wind, because while wind power is intermittent and unpredictable, nuclear power stations have to run 24/7 at a high proportion of their capacity.
It’s no surprise that a Tory chancellor would casually wreck the environment and regional economies, but why hand over nuclear infrastructure to China in particular, and why now? The answer, as ever, is banking.
To compete with America, China needs to be able to borrow at cheap rates across the globe. Ever since Nixon ended the gold standard in the 1970s, the dollar has been- the currency central banks hold on to in case of emergencies. That has allowed America to borrow at staggeringly cheap rates, funding its Far East import addiction.
Now China wants to join the party, and the City of London wants in. Far more important than the infrastructure projects is the sale of RMB30bn ($4.7bn) of Chinese debt in London – the first-ever foreign sale of Chinese debt. The Financial Times explains:
As renminbi internationalisation accelerates, the UK and China have implemented initiatives to link their financial markets, including plans to formally connect London and Shanghai stock markets.
“A highlight of China-UK economic relations is London’s potential role as a top offshore renminbi centre in Europe. This will further strengthen London’s position as a predominant global financial centre,” wrote Shen Jianguang, chief Asia economist at Mizuho Securities, last week.”
Once again, the future of Britain has been auctioned off to keep money flowing into the London banking ponzi scheme.