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China sets sights on new global export: nuclear energy

Thursday, Aug 25, 2016,13:17 IST By metrovaartha A A A

Beijing | On a seaside field south of Shanghai, workers are constructing a nuclear reactor that is the flagship for Beijing’s ambition to compete with the United States, France and Russia as an exporter of atomic power technology.

The Hualong One, developed by two state-owned companies, is one multibillion-dollar facet of the Communist Party’s aspirations to transform China into a creator of profitable technology from mobile phones to genetics.

In the case of nuclear reactors, industry experts say China is underestimating how tough it will be for its novice exporters to compete with the foreign companies that helped create its industry, given the political hurdles, safety concerns and uncertain global demand following Japan’s Fukushima disaster.

China’s government-run nuclear industry is based on foreign technology but has spent two decades developing its own with help from Westinghouse Electric Co., France’s Areva and EDF and other partners.

A separate export initiative is based on an alliance between Westinghouse and a state-owned reactor developer.

The industry is growing fast, with 32 reactors in operation, 22 being built and more planned, according to the World Nuclear Association, an industry group. China accounted for eight of 10 reactors that started operation last year and six of eight construction starts.

Abroad, builders broke ground in Pakistan last year for a power plant using a Hualong One, supported by a $6.5 billion Chinese loan. Also last year, Argentina signed a contract to use the reactor in a USD 15 billion plant financed by Chinese banks.

State-owned companies are lining up to invest in nuclear power plants in Britain and Romania. Such deals usually involve financing packages from state banks, a model that has helped Chinese companies break into the market for building highways and other public works in Africa and the Middle East.

“This is generating significant build-up of skills and industrial experience,” Mycle Schneider, a nuclear energy consultant in Paris, said in an email.

Still, Schneider said Beijing is “seriously underestimating” how hard global sales will be.

Obstacles include strict quality controls, regulations that differ from country to country and competition from the falling cost of wind and solar, he said.

“There is simply no market out there,” Schneider said in an email.