China Will Delay Development of Nuclear Power

High government officials of the People's Republic of China have indicated to American diplomats in Beijing that China "is in no hurry to develop nuclear power," primarily because of its massive capital cost, according to a cable obtained by Multinational Monitor. The cable is from the U.S. embassy in Beijing to Secretary of State Alexander Haig.

China's economy is in a "readjustment" phase and government officials have ordered that overall capital investment be reduced until economic conditions improve, the cable states. It cites Cheng Xuemin, Chief Engineer of the Ministry of Electric Power, as saying that the current capital shortage has not only stalled nuclear development but has also caused large hydro-power projects to be cancelled in favor of smaller ones. Most of China's electricity is currently coal-generated.

Nevertheless, the Deputy Director of China's Atomic Energy Institute, Dai Chuanzeng, believes the economy will recover sufficiently within two years for the country to develop a long-term energy plan that will include nuclear power, according to the cable. Dai told U.S. embassy officials he expects China to have a nuclear power production capacity of about 10,000 megawatts by the year 2000. That is equivalent to the generating capacity of 10 average-sized U.S. nuclear plants.

In discussions with the U.S. officials, Dai advocated that China follow what could be called the Japanese model of nuclear power development: purchase equipment and know-how from foreign corporations initially and then quickly develop China's own nuclear expertise to avoid continued dependence on external suppliers. He argued that China can become technologically independent even faster than Japan did, however, because it has its own uranium and has already gained nuclear experience through its weapons program.

China appeared to move in this direction in 1978, when it signed a nuclear trade agreement with France under which the French government was to subsidize China's purchase of at least two pressurized water reactors. The reactors were to be manufactured by Framatone, France's sole reactor supplier and a company operating under technical license from Westinghouse, the leading U.S. reactor vendor. U.S. companies were prohibited from bidding on the China project by the Carter Administration's restrictions against nuclear exports. The Carter policy infuriated U.S. nuclear industry executives, who claimed that its nonproliferation intent was completely nullified by France's ability and eagerness to provide the Chinese with U.S. reactor technology anyway.

Dai told the U.S. officials, however, that the French have not followed up their original offer with concrete business proposals, and that China is interested in buying reactors and other necessary, equipment from the U.S., as long as suitable financial terms can be arranged. Dai emphasized that financial assistance is essential if China is to import nuclear power plants, because of the large foreign currency component of such purchases.

Cost, not public opposition or safety worries, is now the major obstacle to nuclear development in China, according to Dai. He said the Three Mile Island accident had no impact on Chinese opinion, and that he knew of no popular resistance to nuclear reactors. But he added that it is essential that China adopt a code of safety regulations before constructing any nuclear reactors.

One topic mentioned repeatedly in the cable was the possibility that China would build a number of nuclear plants in Guandong province and sell some of the electricity they produced to neighboring Hong Kong. The idea was first discussed two years ago, but both Dai and Cheng told the U.S. officials that the project is now "not a high priority." Dai stated that the project's only advantage is that the sales of electricity to Hong Kong would earn the hard currency required for paying off the loan needed to finance the venture. Present plans call instead for meeting Guandong's electricity needs by expanding hydropower development along the Hongshui River.

Report by Mark Hertsguurd, who is currently working with the Institute for Policy Studies on a book about links bet weep? the U.S. government and the nuclear industry.