The announcement that Chinese companies can take a stake in British nuclear plants was hardly a surprise: George Osborne had already told reporters that the UK welcomed Chinese investment in all its infrastructure – citing the sovereign wealth fund CIC's existing investment in Thames Water and Heathrow.
China has massively increased investment in Europe in recent years. One study this spring, by private equity firm A Capital, found that Chinese state-owned companies invested more than $12.6bn (£7.8bn) in the continent last year: a year-on-year increase of about 20%. Cash-strapped European countries have proved relatively welcoming.
Involvement in critical infrastructure – and particularly the nuclear sector – is a more delicate issue. Jonathan Fenby, director of the China team at research service Trusted Sources, said: "The question is whether people in Britain will say, 'Our electricity is being sold to the Chinese and if something happens and we say something we shouldn't, they will turn off the lights.' I think that's pretty unlikely, but nuclear brings a level of sensitivity."
But on the Chinese side, the same concerns – diversifying holdings, gaining technical knowledge and turning a profit – apply. The UK is expected to guarantee a generous price for nuclear-generated electricity to ensure more plants are built.
"All these deals have a commercial logic to them. In this case they will get, they hope, some technological expertise which is what they have wanted for their domestic nuclear programme. Then, if it is a successful investment, that helps them vis-a-vis joint ventures elsewhere in the world or selling on their technology," said Fenby.
China already has 17 nuclear reactors and another 28 plants under way at home, although construction has been held up by a moratorium that was imposed after the Fukushima crisis.
If firms manage to meet Britain's strict regulatory requirements, it will give them credibility as they seek to sell their technology elsewhere, experts say. The memorandum of understanding also includes training for Chinese technicians in Britain in radioactive waste management.
Osborne's determination to welcome the Chinese across the board was underscored by his visit to the HQ of telecoms equipment firm Huawei in Shenzhen. Its founder is a former officer with the People's Liberation Army, and despite its insistence that it is not tied to the military or Chinese government, it has faced hostility or outright bans on its involvement in projects in the US, Australia and Canada.
"There are some western governments that have blocked Huawei from making investments. Not Britain. Quite the opposite. That is why I was pleased to welcome Huawei's opening of a flagship office in our country in June, and of £1.3bn of investment that came with it," the chancellor said.
But while Osborne this week praised Chinese firms as "very straightforward partners", others are more wary and say greater openness is crucial.
The nuclear announcement came on the same day that anti-corruption watchdog Transparency International gave Chinese companies the worst ratings in a survey of the openness of firms in Brics economies. Eight of the 10 worst-performing companies – including Huawei – were Chinese, scoring zero on a scale where 10 indicated the greatest transparency.
"Results show that companies from China lag behind in every dimension with an overall score of 20%," Transparency said in the report.
"Considering their growing influence in markets around the world, this poor performance is of concern."
