The UK-China relationship will be hurt by the decision to delay and potentially halt Hinkley Point. The “Golden Era” of bilateral relations will suffer a setback, as China will perceive this decision as a loss of face. But while our short-term economic relationship will take a hit, there will be longer-term benefits. Our bilateral dealings have been conducted on unequal terms. China’s insistence on zero security safeguards at Hinkley Point contrasts with the fact that foreigners are forbidden from similar projects in its own energy sector. It asked for much more than it was willing to give. Theresa May’s government is also rightly prioritising British national interests in the face of a decade of Chinese cyber espionage. After a cooling off period, China will be back. It can only internationalise the renminbi through the City of London. In other words, China needs the UK as much as we need China, and we should not be scared to assert our position.
Linda Yueh, adjunct professor of economics at London Business School, says No.
Despite the warning from the ambassador that it comes at a “crucial historical juncture” and that China hopes that Britain will retain its openness, cancelling Hinkley wouldn’t severely damage UK-China ties. The relationship is at a critical juncture in any case. One reason is Brexit, as it throws into question Britain’s relationship with the EU. China would want to maintain good relations with its largest export market, the EU, while at the same time work with Britain which is a more welcoming hub in the West than America. The relationship is also broader than one project. There would be fallout from cancelling Hinkley, but there are many other ways to signal that Britain is retaining its international outlook after Brexit. That’s essentially what the Chinese will be watching for in the new UK government. And the UK has committed to pursuing trade deals, so openness isn’t in doubt. Besides, nuclear energy is a strategic sector that usually warrants additional scrutiny. The government doing so shouldn’t come as a surprise. The Chinese would do the same.