China Eyes Global Nuclear-Reactor Export Market

 

A model of a Hualong One (HPR1000) nuclear reactor

An export that glows in the dark: a model of a Hualong One (HPR1000) nuclear reactor

THE REAL PRIZE for China in the United Kingdom’s nuclear industry is not Hinkley Point but the plant at Bradwell that is planned to come after — and all the foreign sales of its new nuclear reactors that may come after that.

China, though the state nuclear company China General Nuclear Power Group (CGN), will finance one-third of the £18 billion ($23.5 billion) cost of Hinkley Point C, which will be the UK’s first new nuclear plant in decades. The other two-thirds and the technology will be supplied by the French utility EDF.

The deal gives EDF a showcase that it hopes will offset setbacks in projects in Finland and France for its latest design of reactors, but CGN gets a toehold in western Europe. Bradwell would be built using an indigenously designed Chinese reactor.

It would also be a key early sale in what could be a global export market for, at best guesstimate, at least 130 nuclear power plants. At $15 billion-25 billion each, that adds up to a decent chunk of change. China’s nuclear industry has its eyes firmly on the prize.

Beijing has enthusiastically pursued nuclear power domestically as a low-carbon energy source. As of March, there were 33 nuclear reactors operating in the country, with a total capacity of 28.8GW. A further 22 were under construction with a capacity of 22.1GW. The goal is for nuclear to generate 6% of China’s electricity by 2020, against 2% now.

Other countries are warier of nuclear power, and in particular since the accident at Fukushima in Japan in 2011 (which also caused a temporary suspension of new plant building and approvals in China while new nuclear safety rules were drawn up).

Earlier this month, the new British government of prime minister Theresa May put Hinkley Point on hold for further review.

First, there are the perennial environmental and safety concerns about nuclear energy.

Second, there are concerns about the economics of the deal. The UK government gets out of the upfront building costs and plugs a looming energy shortfall, but it has had to guarantee a price for the electricity Hinckley Point will produce that is twice the current wholesale price — and to do so for 35 years.

In the complex economics of energy pricing that may not prove to be as expensive in the long term as it looks, but the sums — and their underlying assumptions — certainly warrant a second look

Third, May is said to be concerned about China’s involvement, both on grounds of national security and because she has long been critical of the ‘gung-ho’ approach to Britain’s welcoming of Chinese inward investment championed by her predecessor administration of David Cameron and in particular by his finance minister George Osborne.

Osborne and May have long had a distrustful political relationship. Replacing him as finance minister was one of her sets of appointments.

State media have been admonitory of the last-minute delay, saying that cancellation of Hinkley Point could threaten what President Xi Jinping called the ‘Golden Era’ of China-UK investment relations during his state visit to the UK last year. Beijing’s ambassador to Britain, writing in the Financial Times this week, called the times a ‘crucial historical juncture’.

In October last year, before the ‘Brexit’-induced change of prime minister, the UK had reached a strategic investment agreement with China covering three nuclear power plants:

  • Hinkley Point C;
  • an investment in Sizewell that will also use French EPR reactor technology; and
  • Bradwell, whose construction China was expected to lead and which will use Hualong One reactors.

The Hualong One has evolved from upgraded Chinese versions of the French 900MWe class pressurised water reactors already widely in use in China. CGN has developed it jointly (at Beijing’s direction) with China National Nuclear Corp. (CNNC).

The Hualong One is considered to be a ‘third-generation-plus’ reactor, which means it complies with the post-Fukushima safety requirements. It is entirely Chinese designed and intended for sale in international markets as well as domestic deployment.

A Hualong One nuclear reactor under construction at FuqingSix are to be built in China, according to CGN. The International Atomic Energy Agency lists three as under construction. The one in Fuqing in Fujian province is shown to the left.

Internationally, two are to be built in Pakistan and a third is planned for Argentina. CNNC chairman Sun Qin has been quoted as saying that China plans to build 30 nuclear power units in countries along its “One Belt, One Road” initiative by 2030.

Bradwell, though, would be the first build in a developed economy. As such, it would be a highly prized sale that China does not want to let slip through its grasp.

Leave a comment

Filed under China-U.K., Economy, Energy

Straddling Buses And Wireless Trams

 

Traffic-straddling busA GIANT TRAFFIC-STRADDLING bus (seen above) has caught the world’s attention, but it may be a different public transport technology that has the lasting impact.

The day after a prototype 2 metre-high Transit Elevated Bus made its inaugural test run along 300 metres of track in the northeastern city of Qinhuangdao in Hebei province, China’s first fully indigenous super capacitor (‘supercap’) tram rolled off the production line in Zhuzhou in Hunan province.

Both tick several boxes for China: road-congestion reduction, green transport that will lower carbon emissions and cutting-edge technology.

The electric-powered Transit Elevated Bus can carry 300 passengers, with, its manufacturers say, up to four of its 21 metres long by 7.5 metres wide units eventually being able to be strung together.

It runs along a track that can be laid on an existing road and sweeps over the traffic below (or at least over vehicles low enough to fit under) at speeds, it is said, that will eventually reach up to 60 kilometres per hour. It is touted as being like a subway system without the need to build the tunnels, thus reducing construction costs to a fifth of that of constructing a new subway line.

CRRC ZELC supercapacitor tramThe super capacitor tram  (seen above) does not have the futuristic look of the elevated bus. It looks like, well, a tram. Built by the electric motor division of the giant state-owned rolling stock manufacturer CRRC Corp., ZELC, the tram can carry up to 380 passengers and travel at 70 kilometres per hour. Its key feature is that its batteries can be fully powered in 30 seconds — i.e. while it is stopped to take on or put off passengers — so there is no need to install unsightly fixed lines above the track to provide the power.

The technology is at least a decade old and lets trams run for up to 5 kilometres on a single charge. Centenary-less supercap trams using technology from Germany’s Siemens are already running Guangzhou. Nanjing will be next. China’s cities have 5,000 kilometres of tram track with plans to have half as much again by 2020.

But why bother with tracks at all? Super capacitors can also be used to charge electric buses. ZELC has already developed a prototype in Ningbo, a bus that still travels on the road rather than over it.

Leave a comment

Filed under Energy, Industry, Transport

End Of The Road For Uber in China

 

Licenced under Creative Commons from iphonedigital

A BILLION DOLLARS loss here. A billion dollars loss here. Pretty soon you are talking serious red ink.

That is the scale of the annual loss that US ride-sharing service and poster child for the sharing e-economy, Uber, has apparently been making in an effort to break into the China market since 2014. In the face of bitter resistance from local rival Didi Chuxing (app seen above), it has now decided to end the debilitating price war between the two by selling its China operation to its competitor.

The deal struck will leave Uber owning 17.5% of Didi Chuxing, which itself was the fulmination of a merger between Didi Dache and Kuaidi Dache. Didi Chuxing, which also owns a stake in Uber’s US rival, Lyft, will end up with a 90% market share in China (and an estimated market valuation of $35 billion).

The deal comes, ever so coincidentally, within days of China agreeing to provide a legal framework for taxi-ordering apps, which have existed in a grey area. The new rules, due to come into effect in November, will make the heavy discounting that Uber and Didi Chuxing engaged in during their price war illegal.

In that, there may be some succor for Chinese taxi drivers, who, in common with cab drivers in many countries, have been protesting against the new competition of ride-sharing apps which they say is destroying their business.

Didi Chuxing will be able to rebuild its margins, to the pleasure of major shareholders which include Alibaba and Tencent. It is also likely to benefit from the $1 billion it is to invest in Uber’s global operations under the deal, especially once Uber makes its intended initial public offering in the United States.

That share offering will be even more attractive to investors without billion-dollar-losses in China weighing down Uber’s profit and loss account.

There are echoes of Yahoo!’s experience in China. The internet media company sold its China businesses to Alibaba in 2005, along with taking a stake in the Chinese tech group. Regardless of what is happening to Yahoo! now, that China deal paid off handsomely for it.

The model well may be repeated by other U.S. tech companies that are finding doing business in China to be a long and expensive road.

 

 

Leave a comment

Filed under China-U.S., Economy

Giant Seaplanes Add To China’s Maritime Reach

AG600

THIS BYSTANDER NOTED earlier that a year ago to the month Aviation Industry Corp.’s China Aviation Industry General Aircraft subsidiary had completed the fuselage of a giant modern flying boat. That aircraft (seen above), conceived as the TA-600 Water Dragon but born as the AG600, has now rolled off the production line.

It is bigger than Japan’s Shinmaywa US-2, currently the world’s largest seaplane in service. The AG600 can carry up to 50 passengers and has a range of up to 5,000 kilometres. AVIC once said it could be modified to meet the needs of “maritime surveillance, resource detection, passenger and cargo transport”. State media now say its purpose is to “fight forest fires and perform marine rescue missions”.

We confess to not having counted how many forests there are in the South and East China Seas prone to combustion events, but any that might be blocking the PLA-Navy’s access to the blue waters of the Western Pacific, and even those as far away as Australia’s northern coast, will be within the AG600’s dousing range. Coincidentally, the country’s first indigenous large military transport aircraft, the Y-20, has a similar range.

When not fighting fires, the AG600 could, no doubt, be productively employed hopping between those islands  — or ‘rocks’, by the light of the UN Permanent Court of Arbitration’s recent ruling under the UN Convention on the Law of the Sea (UNCLOS) — in the East and South China Seas that Beijing claims as its own.

Leave a comment

Filed under Defence

IMF Ups Its Economic Outlook For China

THE INTERNATIONAL MONETARY Fund exempted China from its ‘Brexit’-induced downgrades to its global economic forecast. In its mid-year update to its World Economic Outlook it has raised its forecast for China’s growth this year by 0.1 of a percentage point from its April projection to 6.6 percent and left its forecast for 2017 unchanged at 2.2%.

The Fund notes the effectiveness of the infrastructure spending stimulus in the first half of this year and the relative isolation of China’s economy from Brexit effects. However, it does warn that China would not escape the effects of a severe downturn in the European economy should that happen as a result of Brexit. And this Bystander has noted some of the risks to stimulus spending.

The IMF’s key paragraph:

In China, the near-term outlook has improved due to recent policy support. Benchmark lending rates were cut five times in 2015, fiscal policy turned expansionary in the second half of the year, infrastructure spending picked up, and credit growth accelerated. The direct impact of the U.K. referendum will likely be limited, in light of China’s low trade and financial exposure to the United Kingdom as well as the authorities’ readiness to respond to achieve their growth target range. Hence, China’s growth outlook is broadly unchanged relative to April (with a slight upward revision for 2016). However, should growth in the European Union be affected significantly, the adverse effect on China could be material.

Leave a comment

Filed under Economy

Stimulus Spending Steadies China’s GDP Slowdown

THE SECOND-QUARTER GDP growth figure came in at 6.7%, the same as for the first quarter. So growth for the first half was surprisingly steady and, surprise, surprise, bang in the middle of the government’s target range for the year of 6.5%-7.0%. Policy support through state-sector infrastructure spending has done the trick.

More of it will probably be needed in the second half. The economy expanded at 6.9% last year, so the slowdown is real if gradual.

However, it cannot slow below 6.5% if the 2021 centenary of the founding of the Communist Party is to be celebrated by hitting the goal of doubling GDP from its 2010 level and thus creating a ‘moderately prosperous society’.

That, in turn, will require more progress on ‘rebalancing’ the economy than has been made to date. At the same time, the infrastructure spending being used to juice growth risks a build-up of more debt with the accompanying concerns that more of it will go bad.

As IMF deputy managing director Mitsushiro Furusawa noted at a symposium on July 11:

A rising share of debt is held by Chinese companies that do not earn enough to cover their interest payments. The most recent IMF Global Financial Stability Report estimated that “debt-at-risk” had increased to 14 percent of listed Chinese companies’ debt, up from 4 percent in 2010.

Still within the bounds of manageability, but moving closer to them rather than away.

1 Comment

Filed under Economy

The Disneyfication of Shanghai

Magic Castle at Disneyland ShanghaiTHERE AREN’T MANY places you could convene a crowd of 60,000 in China without police of any stripe in sight. Indeed, there may be only one — the new Disneyland in Shanghai (above).

Such was the appetite for Shanghai to land the theme park that Disney was able to negotiate self-policing rights. Chinese police authority stops at the exit to the new metro station outside the front gate. Thereafter it is the Disney security staff that you can see anywhere in the world there is a Disneyland.

Shanghai’s may turnout to the be world’s most-visited theme park. What does that say about whether American or Chinese culture is the most dominant?

Leave a comment

Filed under China-U.S., Politics & Society