China Nuclear Plans Could Help Stimulus Efforts

By BRIAN SPEGELE

BEIJING—China's latest step toward relaunching its nuclear-power ambitions could play into its efforts to stimulate the country's economy, according to analysts, even as officials face a public that has demonstrated worries about nuclear safety.
China's cabinet said late last week that leaders had approved the country's 2020 nuclear-safety strategy and had completed inspection of existing nuclear reactors. The comments, while expected, offer a sign that China's leaders could soon begin the approvals process for new reactors, which was suspended in March 2011 amid public concern over nuclear safety following Japan's Fukushima Daiichi nuclear disaster.
Energy experts and the nuclear-power industry are watching for when approvals might resume or whether the government could adapt different nuclear technologies as a result of the Fukushima disaster. Economists and investors also are watching because many of them see a potential Chinese nuclear build out as a part of a package of targeted stimulus efforts undertaken by Beijing amid slowing economic growth.
"The size of China's nuclear program is too big to ignore as a tool to create jobs in a potential fiscal stimulus" if problems in the euro-zone worsen, said Guo Shou, a Barclays energy analyst, in an email.
China has 15 nuclear-power reactors in operation, with a total generating capacity of around 11.9 gigawatts, according to the World Nuclear Association. Before Fukushima, China's nuclear capacity was expected to reach 80 gigawatts by 2020. As a result of the post-Fukushima slowdown, many analysts say China's expected capacity likely will be lowered to 60 to 70 gigawatts by 2020.
China's state-owned nuclear-equipment providers could see billions of dollars in revenue when the country resumes taking on new projects, just as China's biggest nuclear companies are increasingly seeking business with governments across the developing world interested in building reactors. Analysts say Chinese companies have the advantage in producing some nuclear-reactor technology at large scale as they seek to become globally competitive and support jobs at home.
China has signaled that it is unlikely to unveil a stimulus package similar to the one it used after the 2008 financial crisis to spur growth. The stimulus efforts helped keep China's economic growth humming but led to worries about overcapacity and bad debt on the books of the country's banks. This time, analysts expect industry-specific government support policies, with nuclear and other energy infrastructure projects poised to be among those benefiting most. The government already has hastened the approval of major projects and unveiled targeted tax cuts and incentives for purchasing household appliances.
Energy demand is expected to continue rising sharply as growing numbers of middle-class Chinese demand everything from air conditioners to electric-powered vehicles. Some estimates say China's electricity consumption could rise to 8,500 terawatt hours by 2020 from about 4,700 terawatt hours in 2011. In recent months, comments by officials and Chinese industry executives signaled China appeared to have little intention of dramatically moving away from its nuclear plans. Nuclear power is particularly appealing for Chinese authorities as Beijing looks to reduce a reliance on imported oil and polluting coal.
Nonetheless, the Chinese public has shown awareness of concerns about nuclear safety after Fukushima. The accident itself spurred panicked buying of salt, which many believed could protect them from radiation, immediately afterward. It also spurred widespread fears about food imports from Japan. In perhaps the most dramatic case, villagers and local government officials in Anhui province late last year petitioned higher authorities to challenge plans to build a nuclear facility nearby.
Analysts expect a resumption of new reactors during the first half of 2012. Industry executives expect the Fukushima disaster to bring an accelerated shift away from China's older-model CPR-1000 reactor, based on French technology, to the newer AP1000 reactor developed by Westinghouse Electric Co., a unit of Toshiba Corp.