Bernard Jenkin MP is Chair of the Liaison Committee. He is MP for Harwich and North Essex.
There is no such thing as a truly independent Chinese company. Any involvement with Chinese companies comes with strings attached that lead all the way back to the Communist leadership in Beijing. We tried to ignore this with Huawei and the construction of our 5G network. But Chinese regime influence is an inevitable fact of any relationship with Chinese companies. And the Government still don’t seem to have learnt this lesson.
Near my constituency, a next generation nuclear power station is out to consultation at Bradwell on the Essex coast. Bradwell B is intended as a vital part of the UK’s future carbon-free base electricity supply. The British pretty well invented nuclear power, but we allowed BNFL to sell the n-power builder Westinghouse to Toshiba in 2005, so the UK has no indigenous n-power construction capability.
Dependent on foreign designs, the government agreed with China that CGN (China General Nuclear) should construct two Chinese designed reactors at Bradwell. CGN is entirely state-owned.
So the Government has agreed that the Chinese government should build a key part of our own critical national infrastructure (CNI). If this is to go ahead, the very least we should insist upon is a set of safeguards to protect our national security and CNI from malign foreign influence from a hostile government.
The Chinese government has demonstrated an established pattern of IP theft, nuclear espionage, political interference with private enterprise and cyber attacks on Western interests. Chinese companies are not the same as private companies based in Europe or the United States, or even state owned ones like the French EDF, which is building Hinkley Point.
Only three years ago, China passed a law granting itself the power to compel any Chinese citizen to cooperate with the government of China for national security purposes. CGN has itself been indicted by the US government, after US-based employees attempted to recruit American nuclear experts for projects in China.
Last year, Dr Christopher Ashley-Ford, the US Assistant Secretary of State, said: “the Chinese nuclear industry is not a purely civilian industry, instead operating in close partnership with the People’s Liberation Army (PLA)…To cooperate with the Chinese nuclear business, in other words, is thus to some extent inescapably to cooperate with the PLA.”
If we don’t want the UK taxpayer to contribute to the strength of the Chinese military, or UK based technology to mysteriously end up in Beijing, we need to act swiftly and decisively, whilst also recognising that, at least for now, we still need Chinese financing and technical expertise in order to expand the UK’s civil nuclear infrastructure.
The only safeguards currently proposed for Bradwell B are the same as for any nuclear power station. They are wholly inadequate. At present, China will finance, build, own and operate Bradwell B. The Office of Nuclear Regulation states that parent companies may not “usurp [the company’s] authority”, but what does this mean would happen if it happened? How can China “usurp” the authority of a company it owns anyway? This is either more wishful thinking about China, or more wilful strategic blindness.
The Government is proposing a new National Security and Investment law, of course, but this focuses on ‘trigger events’ – granting ministers the power to prevent, for example, a foreign takeover. The Bradwell deal signs us up to the takeover in the first place.
Nuclear espionage is already illegal, but this hasn’t stopped China so far. If we are to prevent espionage creating new crimes is insufficient. We must place obstacles in the way of those wishing to carry out criminal activities against us in the first place.
So the Government must use the new law to introduce a special regime for all foreign-owned CNI: a UK plc with a government-owned ‘golden share’, giving the Government special powers, and placing obligations on directors to inform the government of non-UK threats to UK CNI or to national security. This arrangement is based on the ‘golden shares’ introduced by the Thatcher government in 1980s for newly privatised industries, such as the defence research company, Qinetiq.
Under this arrangement, the Government would get the power to prevent takeovers and to appoint board members Senior company executives would have special responsibilities to notify the Government if they believed certain events were about to take place, including the preparation of intellectual property for transfer or sale and the employees involved. After all, any conspiracy to steal nuclear secrets that doesn’t involve senior executives would at least be more difficult to carry off successfully, even if it can’t eliminate the risk entirely.
The Government must manage the risks of foreign investment in UK CNI if we are to both build an infrastructure to secure our future as well as to regain China’s respect for our system and our values. Its huge economy and our own are interlinked in so many ways, and we should have positive and reciprocal engagement, but we must end the decades of blindness to China’s long-term aim of creating Western dependency on it.