The Hinkley Point Debacle: British PM Theresa May angers China

The last few days have provided a further example of the dynamism and effectiveness of Russian foreign policy during the Putin era.  Over the course of just three days Putin has met or will meet with the four leaders of four key powers on Russia’s southern flank: Iran, Turkey, Azerbaijan and Armenia.  Moreover he will do so in three different cities (Baku, St. Petersburg and Moscow).  Along the way Putin has also had a meeting with his security chiefs almost certainly to discuss the situation in Aleppo.

By contrast in August the West’s leaders all seem to have taken themselves off on leave. US President Obama, never the most engaged of leaders, plays golf, leaving all the hard work in the last months of his Presidency to his hapless Secretary of State John Kerry.  German Chancellor Angela Merkel gave a press conference at the end of July but has otherwise vanished into invisibility.  French President Francois Hollande is attending the Rio Olympics.

Meanwhile in Britain new Prime Minister Theresa May’s first foray into international diplomacy has been disastrous, with her decision to put the Hinkley Point nuclear reactor project in which China is a major investor on hold pending a detailed review on the very eve of its launch being the cause of huge anger in Beijing. 

The background to this decision is that Theresa May’s predecessors – former British Prime Minister David Cameron and his finance minister former Chancellor George Osborne – were committed to forging a close relationship between Britain and China.  Not only did they go out of their way to solicit Chinese investment in the British economy, but to US dismay they signed Britain up to the Chinese led Asian Infrastructure Investment Bank, one of the new financial institutions China is setting up to challenge the US dominated IMF and World Bank.  Bringing the Chinese in as investors in the Hinkley Point nuclear reactor project was supposed to seal the deal, demonstrating the strength of the connection between Britain and China.

Not surprisingly Theresa May’s decision to put the whole Hinkley Point nuclear reactor project on hold – made without any warning or prior consultation with Beijing – therefore came as a shock to China, all the more so as leaks in the British media have made it clear that it was concerns about China’s role in the project that caused Theresa May to make the decision.  Though no-one is openly saying it, it is likely Theresa May took the decision following pressure from the US.  That the Chinese are furious has now been made clear in a polite but firm article written by the Chinese ambassador and published by The Financial Times. 

Theresa May’s decision is actually bizarre and is a text book example of how not to conduct international diplomacy. Even if Theresa May genuinely believes that the pro-Chinese course Cameron and Osborne were steering is unwise, and even she also doubts the economic and environmental case for the Hinkley Point nuclear reactor (as many do), she should have realised that going back on a major project agreed with the Chinese government was simply not a proper option. 

There was in fact no reason to behave in this crass way.  There would have been nothing to prevent Theresa May privately assuring the US that Britain’s romance with China is at an end whilst letting the Hinkley Point nuclear project go ahead.  That way Britain could have quietly charted a new course away from China without causing entirely unnecessary offence in Beijing.  As it is, with the Chinese now offended and angry, there must be serious doubts about whether China any longer considers Britain a reliable trade partner and whether Britain can continue to attract the Chinese investment in the way it has been seeking.

The simple fact is that unlike the Russians the Western powers – including it turns out the British – simply don’t do diplomacy any more.  If the Russians end up winning every point that is part of the reason.  As for the Chinese, they will doubtless from now on concentrate on more reliable partners like the ones they have in Moscow and in scores of other places.