China is powering ahead with nuclear energy at home and abroad — even if some countries have doubts about its ambitions.

Just thirty years after bringing its first domestic plant online, China has already become the world’s third largest domestic producer of nuclear power. Now equipped with its own reactor technology, the country’s major operators have plans to construct plants in more than a dozen other countries. China is already second only to Russia as the world’s most prolific exporter of nuclear plants and equipment.

Yet the march of Chinese nuclear power is stoking national security concerns elsewhere, similar to those that have recently stymied major Chinese tech and telecoms companies like Huawei. The U.K. government, which once welcomed Chinese state-owned nuclear power operators, is reportedly mulling their removal from future projects. Other European countries, including the Czech Republic and Romania, have hesitated over involving China in their nuclear plants.

Chinese nuclear projects can still be more appealing than those of rivals such as Russia, the U.S., South Korea, and Japan, thanks to generous financing terms, lower construction costs, and fewer attached regulatory strings. China has built four nuclear plants in Pakistan, with two more under construction, and another planned. Agreements or memorandums of understanding for further plants have been signed with Argentina, Turkey, Iran, Saudi Arabia, Kenya, Egypt, and Sudan.

This week The Wire takes a look at China’s expanding nuclear industry, with a focus on one of its major companies.

CHINESE NUCLEAR GOES GLOBAL

Back in the early 2000s Beijing’s focus was on rapid nuclear power development at home, with an often-cited target of 400 to 500 gigawatts of capacity by 2050. By contrast the U.S., the world’s leading nuclear energy generator, currently has a capacity of under 100 gigawatts.

The crisis at Japan’s Fukushima nuclear power plant in March 2011 rattled the Chinese government, which suspended all nuclear plant approvals shortly afterwards. Chinese leaders feared that a comparable disaster at home could spell disaster for the Communist Party. 

“At a certain level, every added reactor is added risk,” says Mark Hibbs, a senior fellow at the Carnegie Endowment for International Peace who authored a 2018 report on the future of nuclear power in China. “That’s the difference between two hundred reactors online and five hundred.”

Beijing resumed reactor approvals in 2015, but scaled back its capacity targets to around 300 gigawatts of energy by 2050 — a reduction equivalent to some 250 reactors. Exporting power plants is helping China’s huge nuclear state-owned enterprises fill the demand gap. In 2019, a senior industry official predicted that China could build up to 30 reactors overseas within the next decade as part of the Belt and Road Initiative.

NUCLEAR SELF-RELIANCE

China’s nuclear industry took a huge step forward in November 2020, when the first plant using its homegrown Hualong One reactor was switched on in Fuqing, in the southeastern province of Fujian. Previously, China had built reactors based on technology from the U.S.’s Westinghouse or France’s Areva and EDF, paying them expensive licensing fees.

So-called third generation reactors like Hualong One have longer operational lives and more enhanced safety systems than their predecessors — even if some in the industry grumble over China’s claims that its technology is fully indigenous. 

“With its own homegrown technology, China doesn’t have to pay licensing fees, so they can lower their prices significantly,” says Lami Kim, an assistant professor who studies China’s nuclear export policy at the U.S. Army War College. 

The success of Hualong One — marketed internationally as the HPR1000 — could also reduce the pressure from international sanctions for operators such as state-owned China General Nuclear Power Group (CGN), which the U.S. added to its export blacklist in 2019 over accusations that it had stolen technology for military use. When CGN’s Taishan plant in Guangdong province recorded increased radiation levels in June, its French partner EDF had to apply for a U.S. government waiver in order to share vital technical assistance.

Countries that purchase China’s nuclear equipment will still face risks, stemming as much from its operators’ management style as reactor safety. Unlike the U.S., China doesn’t require recipient countries to sign up to multinational safety agreements as a condition of sales. Nor does it participate in the International Atomic Energy Agency’s reporting system that helps share experience of managing incidents among nuclear operators.

“I’m not necessarily questioning the quality of the technology, but how people manage and operate the plants, and how transparent they are about their operations,” says Kim, from the U.S. Army War College. 

Still, for countries looking to save money, China’s relatively lax demands may be part of the appeal. “Countries have to go the extra mile to achieve the U.S.’s rigorous nuclear security and nonproliferation standards aimed at protecting facilities from sabotage and theft,” says Kim. “That could be cumbersome.”  

CGN — IN AND OUT OF FAVOR

CGN has become one of China’s biggest state-owned nuclear operators, despite its regional origins. The company was formerly known as China Guangdong Nuclear Power Group, reflecting its roots in the southern province that borders Hong Kong. It built and operated many of China’s earliest nuclear plants there, such as those in Daya Bay and Taishan, in joint ventures with major French companies. 

CGN early on tried to distinguish itself from the more staid, state-run nuclear behemoth China National Nuclear Corporation (CNNC).¹A third nuclear SOE, State Power Investment Corporation, was formed out of a merger between China Power Investment Corporation and State Nuclear Power Technology Corporation in 2015. SPIC is also engaged in a small number of overseas nuclear projects.

“CGN was established with the expectation that over time it would become a flagship company alongside the likes of Siemens, Westinghouse, General Electric, and others,” says the Carnegie Endowment’s Hibbs. “It became a company that was, in a sense, not typically Chinese.” 

In December 2014, CGN raised $3 billion from an initial public offering in Hong Kong. Less than a year later, in October 2015, then-U.K. Prime Minister David Cameron announced, alongside a visiting Xi Jinping, that CGN would take a 33 percent stake in the Hinkley Point nuclear plant the first major Chinese investment in a Western nuclear facility.

But CGN’s reputation among Western countries has since nosedived. In August 2016, the U.S. government charged an American nuclear engineer with conspiring to help CGN develop nuclear material without U.S. approval. CGN’s inclusion on the U.S. entity list in 2019 further undermined its image as a commercially-oriented nuclear operator. Just over a week ago, the Financial Times reported that the U.K. was mulling removing CGN from its nuclear power projects.

The transformation in CGN’s behavior in recent years “fits the picture that sometime in the middle of the 2010s there was a policy decision made at a very senior level in China… where the companies involved in nuclear operations outside of China were instructed to become much more aggressive in their activities such as to contribute to China’s national defense,” says Carnegie’s Hibbs.

Today, it’s less clear what distinguishes CGN from its domestic counterpart CNNC: The two operators jointly own the company which developed the Hualong One reactor, for example. 

“There’s a lot of lobbying and a certain amount of strategic planning on how to divide up the nuclear pie,” says Hibbs. “CGN and CNNC are different corporate entities, but they’re very interlocked.”

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