Britain´s decision to delay final approval for the Hinkley Point nuclear power plant risks cooling relations with economic powerhouse China under new Prime Minister Theresa May, analysts say.
May´s predecessor David Cameron, who quit after the June referendum vote to leave the European Union, made strong ties with Beijing central to his economic policy.
During a state visit last year, Britain rolled out the red carpet for Chinese President Xi Jinping as it sought to attract investment to its austerity-hit economy.
Cameron said Britain would be China´s “best partner in the West” as they signed £40 billion (47 billion Euros, $53 billion) of deals, including Beijing taking a £6 billion stake in Hinkley Point, Britain´s first new nuclear plant in a generation.
A ceremony to sign the £18 billion Hinkley Point deal was planned for July 29, the day after the other player in the deal, French energy giant EDF finally approved the project which had deeply divided its top management as critics fear it could bankrupt the French utility.
However, the French government, which owns 85 per cent of EDF, has been doggedly determined to get Hinkley Point approved as it sees the project as crucial for the long-term viability of France´s nuclear industry.
But Britain´s new leader May, who took power on July 13, had already decided to delay the final decision on the project, which is now expected in September.
There are questions over whether the delay could jeopardise ties between Britain and China, the world´s second-biggest economy, at a time when London will need to build strong trade links post-Brexit.
Chinese state media reacted to the delay by saying it “adds uncertainties to the ´Golden Era´ of China-UK ties”.
Beijing “cannot tolerate” any accusation that its investment would threaten British national security, the official Xinhua news agency said.
While it is still unclear whether May, a former home secretary, will scrap or approve the project, her joint chief of staff has previously made his scepticism clear.
Howard Wheeldon, a defence and strategic analyst with his own consultancy, predicted the delay “probably marks the end of the scheme as we have come to know it.”
“We just cannot afford to take such a massive, costly and — given that it will only supply seven percent of the UK´s electricity needs — unnecessary risk,” he said.
The prime minister´s official spokeswoman insisted the government would “continue to seek a strong relationship with China” and needed a “reliable and secure energy supply”.
But with May´s government shaking off much of Cameron´s economic legacy — signalling a less hardline approach to austerity and introducing a new industrial strategy — the options look wide open.