Power broker

Don’t watch The China Syndrome

With North Korea’s nuclear machinations dominating the headlines in recent months, it is easy to forget that China has another atomically-ambitious friend on its borders, albeit much further to the west.

Pakistan, partly thanks to China’s help, has long enjoyed the nuclear capability that North Korea so desperately craves. But it is also reaching out once more to its “all weather” ally, this time with the hope that China’s nuclear support will help alleviate its crippling electricity shortages.

Last week Lü Huaxiang, vice-president of China’s National Nuclear Corporation (CNNC), all but confirmed recent stories in the American and Pakistani media that the company will be providing two domestically-designed reactors for Karachi’s aging nuclear power plant.

“We have acquired the first export contract for a self-developed, advanced nuclear reactor and we are working on other deals,” Lü told local media.

CNNC and China’s foreign ministry has been careful not to mention Pakistan by name on the deal because the South Asian nation hasn’t signed the Nuclear Non-Proliferation Treaty (NNPT). This makes any contract technically illegal under the conditions set by the Nuclear Suppliers Group (NSG), an anti-proliferation group that China has been a member of since 2004. China has found ways of selling nuclear technology to Pakistan since then, but most NSG members had hoped that it would not try to exploit treaty loopholes once again.

Comments from China’s foreign ministry suggest that this might happen. “Cooperation between China and Pakistan does not violate relevant principles of the Nuclear Suppliers Group,” spokesperson Hong Lei said last month, adding that recent projects were “in compliance with the international obligations shared by both countries”.

Part of the reason that China feels able to assist Pakistan is that the US brokered an NSG waiver allowing India – Pakistan’s arch rival – to gain access to nuclear markets in 2008.

India, which has also refused to sign the NNPT, insists on its right to hold nuclear weapons in order to protect itself against Pakistan and, to some extent, against China too.

India’s inability to protect the northeastern state of Arunachal Pradesh during a border conflict with China in 1962 was a major impetus for New Delhi pushing forward with its own nuclear weapons programme.

And this week there have been reports from Indian sources that Chinese forces have established a new camp 10 kilometres inside Indian-controlled territory in a disputed area known as Aksai Chin.

“New Delhi should send a strong message to Beijing that it is not dealing with an India of 1962. Simultaneously, it should step up its preparedness to take on China in case it shows any sign of belligerence now or in future. Preparing for a military conflict is the best way to avoid it,” an editorial in the Indian Express insisted this week.

China’s foreign ministry denies any incursion in the region, although it was not as forthright when asked about the sale of the nuclear reactors to Pakistan.

According to the CNNC website – which has listed the Karachi Nuclear Power Plant as a potential customer – the ACP-1,000 model is a pressurised water reactor, 85% of which is manufactured in China.

China has exported smaller reactors before but has generally been prevented from selling larger ones abroad because they have been classed as too similar to US and French designs.

CNNC is currently building two ACP 1,000 reactors in Fujian province’s Fuqing. “Our domestic plant will be a reference for foreign customers,” Lü said, adding that the Chinese design is 10% cheaper than similar models produced by US companies. Despite its price advantage, CNNC doesn’t want to be viewed as the low-cost option though and hopes to get International Atomic Energy Association approval to export to Europe and North America in future. It has also publicised the fact that Argentina is said to be considering the ACP 1,000 for a new nuclear project.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.