Wealthy Nations Daily Update - UK / China nuclear deal

As well as the flurry of deals announced over the 4 day state visit of Chinese President Xi to the United Kingdom, a deal that may have gone unnoticed was the purchase of Hamleys by the Hong Kong listed women’s footwear and clothing retailer C.banner International Holdings. The price for the oldest toy shop in the world is reportedly around GBP100mn sources close to the deal said. This latest deal is in addition to other famous shops that have been taken into foreign ownership over the last few years. Harrods is owned by Qatar Holdings, House of Fraser owned by China’s Sanpower Group and Harvey Nichols by Dickson Concepts. Even Gieves & Hawkes, tailor to royalty, is owned by Trinity Ltd, another Hong Kong listed company.

Of course the big news was the multi-billion dollar deal to finance the UK’s next generation of Nuclear power stations. China's General Nuclear Corporation (CGN) will take a GBP6bn stake in the Hinkley Point nuclear plant controlled by France's EDF as well as a two-thirds stake in the Bradwell nuclear plant. At the Bradwell plant, CGN plan to build a Chinese-designed nuclear power plant, the first in the west, to be used as a launchpad to a global roll out of its technology. One reason they wanted to use the UK as the first location to design and build their first reactor in the west was the tough standards of regulation employed in the UK on nuclear power. The way CGN look at it, if they can build and operate nuclear power here in the UK they will have a head start in taking the technology global.

So what does the Chinese Government get out of all these deals (reportedly up to GBP40bn). Yes the UK market is important to them, however nowhere near as important as other export markets in Asia or indeed the United States. As Robin Niblett, Head of Chatham House, an independent policy institute based in London said, what this does give the Chinese is access to the City and its financial markets and is a “great platform from which China can go global”. This is particularly relevant as China seeks to internationalise the Yuan.

Another deal that did not get a lot of headline news was a GBP2bn biomass project to generate 299 megawatts from green energy from plant waste in Wales. Of course most of the energy would be used to heat and light homes, however excess heat will be used to grow thousands of tonnes of king prawns, fish and salad leaves. The 2 sites for the biomass power stations are Port Talbot and Anglesey. So, you never know, maybe they will become the new mecca for fish restaurants in the coming years!

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