Theresa May writes conciliatory letter to Chinese president amid Hinkley nuclear deal spat

The message comes amid growing uncertainty over what was only recently touted as a 'golden era' of bilateral relations

Theresa May has written to China urging closer trade and strategic ties with the UK (Reuters)

Theresa May has written to Chinese President Xi Jinping and Premier Li Keqiang to express her desire to enhance trade and strategic ties, after tensions emerged over the controversial Hinkley Point nuclear power plant.

Alok Sharma, on his first official visit to China since being appointed Minister for Asia and the Pacific last month, told Chinese Foreign Minister Wang Yi in Beijing on Monday that the UK attaches great importance to cooperation with Beijing, according to an online statement by China’s foreign ministry. Sharma called China an “important global strategic partner.”

The message comes amid growing uncertainty over what was only recently touted as a “golden era” of bilateral relations.

The Prime Minister postponed approval of the £18 billion Hinkley plant just hours before the deal was due to be signed in July.

George Osborne and David Cameron had been enthusiastic supporters of closer ties with China, but many have balked at the spiralling costs of the Hinkley plant, and the fact that the UK would be locked into a 35-year energy supply contract with foreign powers.

Chinese state television rejected the suggestion that Chinese investment in the plant, which would generate 7 per cent of the UK’s energy needs, represented a security risk and warned against the UK’s “suspicious approach”. Last week, the Chinese backer of Hinkley was accused of “nuclear espionage” in a US lawsuit.

In her correspondence, May said the UK supports China’s hosting of next month’s G20 meeting, adding that she was looking forward to attending.

Wang said China welcomes May’s visit and hopes to keep up “dialogue and coordination” with the new UK government.

May has shown signs that she is willing to take a more active role in steering the economy than her predecessor, creating a new department tasked with implementing an “industrial strategy”.

The new prime minister also said she would not be shy in intervening to prevent foreign takeovers of firms

‘Long Shadow’

Beijing is “willing to work together with the UK’s new government to deepen pragmatic cooperation and push ahead the Sino-UK ties towards the direction of ‘a global comprehensive strategic partnership for the 21st Century’,” Wang told Sharma at their meeting.

Feng Zhongping, vice president of the China Institute of Contemporary International Relations, a government-backed think tank in Beijing, said that if the Hinkley Point nuclear joint venture fell through, it would cast “a long shadow” over bilateral ties between Beijing and London.

Feng said it may also “negatively affect” specific deals including a potential China-UK free trade agreement.

“The Brits probably haven’t fully realized yet how it would impact China-UK relations,” said Feng, who specializes in China’s relations with Europe. “It would sour the entire atmosphere, and lead to the impression that there is little protection of Chinese investment in the UK”

‘New Opportunities’

During July’s G20 finance ministers’ meeting in Chengdu, Philip Hammond said it was time for the UK to explore “new opportunities” after the vote to leave the European Union, and that the government had begun discussions with China on a free trade deal. China’s Ministry of Commerce has expressed its openness to working with the UK on a feasibility study for such a pact.

During his meeting with Sharma, Wang said China hopes the UK will continue to practice a “proactive, open” policy toward China.

Less than three weeks in office after the departure of David Cameron, May’s government cited the need for a “reliable and secure energy supply” and promised a final decision in the early autumn. China has urged the UK to reach “a decision as soon as possible.”

Writing in the Financial Times last week, Liu Xiaoming, China’s ambassador to the UK, warned that the bilateral relationship is at a “crucial historical juncture.”

China’s £6 billion investment in the Somerset plant was the biggest deal announced during Xi’s state visit to the UK in October last year. Cameron hailed the agreement as evidence of flourishing ties.

“The UK’s relationship with China is strong, growing and delivering benefits for both our countries,” Sharma said before his meeting with Wang Yi. “Britain is open for business and an attractive destination for international investors, including from China.”

Additional reporting by Bloomberg