The new government has begun to explore what type of trade deal it could strike with the Chinese, but that process could be more difficult if the nuclear project is blocked.
“For a kingdom striving to pull itself out of the Brexit aftermath, openness is the key way out,” warned Xinhua.The delay threatens the “Northern Powerhouse plan" to boost the economies of northern English cities, for which Chinese investment was considered crucial.Lord (Jim) O’ Neill, a key proponent of the Powerhouse, is said to be considering whether to resign as commercial secretary to the Treasury.A potential bust-up with China comes at a bad time for British business.For many years, British firms trailed German, French and American exporters in the Chinese market.
Now, though, with tens of millions of middle-class Chinese looking for better health care, insurance and financial services—areas in which Britain excels— “This should be Britain’s time,” says David Martin of the China-Britain Business Council, a lobby group.London this year became the largest clearing centre for the yuan outside greater China.“It is going to need some skilful diplomacy to maintain this relationship,” admits Mr Martin.But he still thinks the pessimism is overblown.Chinese leaders last year launched an initiative called “Made in China 2025”, to deal with its declining competitive advantage in manufacturing by helping companies make better-quality products.The scheme is a chance for British firms to supply high-tech equipment, design and consulting.
British bankers, oilmen and consultants are also working with Chinese companies in third countries on multi-billion dollar projects as part of China’s “One Belt, One Road” initiative.The scheme aims to revive the ancient silk roads, connecting China with its neighbours and beyond, through investment.Much of this will be unaffected by Brexit or Hinkley.“The things the UK was good at on June 22nd the day before the referendum, it was still good at on June 24th,” says Mr Martin.Though some state-owned Chinese companies may think twice, private firms are likely to continue looking for growth in the West.
China will triple its overseas assets from $6.4 trillion to almost $20 trillion by 2020, says the Rhodium Group, a consultancy.“China is eager to expand its presence in OECD countries such as Britain.” says Rhodium’s Thilo Hanemann.Attitudes across Europe are changing, he admits: in Germany, for example, some politicians opposed the purchase of Kuka, a robotics firm, by Midea, a big Chinese appliance manufacturer.But for every sensitive deal that draws opposition, he says, there may be ten that go through.