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LinkSpace’s reusable rocket RLV-T5, also known as NewLine Baby, is carried to a vacant plot of land for a test launch in Longkou, Shandong province, China, April 19, 2019. REUTERS/Jason Lee
April 26, 2019
By Ryan Woo
LONGKOU, China (Reuters) – During initial tests of their 8.1-metre (27-foot) tall reusable rocket, Chinese engineers from LinkSpace, a start-up led by China’s youngest space entrepreneur, used a Kevlar tether to ensure its safe return. Just in case.
But when the Beijing-based company’s prototype, called NewLine Baby, successfully took off and landed last week for the second time in two months, no tether was needed.
The 1.5-tonne rocket hovered 40 meters above the ground before descending back to its concrete launch pad after 30 seconds, to the relief of 26-year-old chief executive Hu Zhenyu and his engineers – one of whom cartwheeled his way to the launch pad in delight.
LinkSpace, one of China’s 15-plus private rocket manufacturers, sees these short hops as the first steps towards a new business model: sending tiny, inexpensive satellites into orbit at affordable prices.
Demand for these so-called nanosatellites – which weigh less than 10 kilograms (22 pounds) and are in some cases as small as a shoebox – is expected to explode in the next few years. And China’s rocket entrepreneurs reckon there is no better place to develop inexpensive launch vehicles than their home country.
“For suborbital clients, their focus will be on scientific research and some commercial uses. After entering orbit, the near-term focus (of clients) will certainly be on satellites,” Hu said.
In the near term, China envisions massive constellations of commercial satellites that can offer services ranging from high-speed internet for aircraft to tracking coal shipments. Universities conducting experiments and companies looking to offer remote-sensing and communication services are among the potential domestic customers for nanosatellites.
A handful of U.S. small-rocket companies are also developing launchers ahead of the expected boom. One of the biggest, Rocket Lab, has already put 25 satellites in orbit.
No private company in China has done that yet. Since October, two – LandSpace and OneSpace – have tried but failed, illustrating the difficulties facing space start-ups everywhere.
The Chinese companies are approaching inexpensive launches in different ways. Some, like OneSpace, are designing cheap, disposable boosters. LinkSpace’s Hu aspires to build reusable rockets that return to Earth after delivering their payload, much like the Falcon 9 rockets of Elon Musk’s SpaceX.
“If you’re a small company and you can only build a very, very small rocket because that’s all you have money for, then your profit margins are going to be narrower,” said Macro Caceres, analyst at U.S. aerospace consultancy Teal Group.
“But if you can take that small rocket and make it reusable, and you can launch it once a week, four times a month, 50 times a year, then with more volume, your profit increases,” Caceres added.
Eventually LinkSpace hopes to charge no more than 30 million yuan ($4.48 million) per launch, Hu told Reuters.
That is a fraction of the $25 million to $30 million needed for a launch on a Northrop Grumman Innovation Systems Pegasus, a commonly used small rocket. The Pegasus is launched from a high-flying aircraft and is not reusable.
(Click https://reut.rs/2UVBjKs to see a picture package of China’s rocket start-ups. Click https://tmsnrt.rs/2GIy9Bc for an interactive look at the nascent industry.)
NEED FOR CASH
LinkSpace plans to conduct suborbital launch tests using a bigger recoverable rocket in the first half of 2020, reaching altitudes of at least 100 kilometers, then an orbital launch in 2021, Hu told Reuters.
The company is in its third round of fundraising and wants to raise up to 100 million yuan, Hu said. It had secured tens of millions of yuan in previous rounds.
After a surge in fresh funding in 2018, firms like LinkSpace are pushing out prototypes, planning more tests and even proposing operational launches this year.
Last year, equity investment in China’s space start-ups reached 3.57 billion yuan ($533 million), a report by Beijing-based investor FutureAerospace shows, with a burst of financing in late 2018.
That accounted for about 18 percent of global space start-up investments in 2018, a historic high, according to Reuters calculations based on a global estimate by Space Angels. The New York-based venture capital firm said global space start-up investments totaled $2.97 billion last year.
“Costs for rocket companies are relatively high, but as to how much funding they need, be it in the hundreds of millions, or tens of millions, or even just a few million yuan, depends on the company’s stage of development,” said Niu Min, founder of FutureAerospace.
FutureAerospace has invested tens of millions of yuan in LandSpace, based in Beijing.
Like space-launch startups elsewhere in the world, the immediate challenge for Chinese entrepreneurs is developing a safe and reliable rocket.
Proven talent to develop such hardware can be found in China’s state research institutes or the military; the government directly supports private firms by allowing them to launch from military-controlled facilities.
But it’s still a high-risk business, and one unsuccessful launch might kill a company.
“The biggest problem facing all commercial space companies, especially early-stage entrepreneurs, is failure” of an attempted flight, Liang Jianjun, chief executive of rocket company Space Trek, told Reuters. That can affect financing, research, manufacturing and the team’s morale, he added.
Space Trek is planning its first suborbital launch by the end of June and an orbital launch next year, said Liang, who founded the company in late 2017 with three other former military technical officers.
Despite LandSpace’s failed Zhuque-1 orbital launch in October, the Beijing-based firm secured 300 million yuan in additional funding for the development of its Zhuque-2 rocket a month later.
In December, the company started operating China’s first private rocket production facility in Zhejiang province, in anticipation of large-scale manufacturing of its Zhuque-2, which it expects to unveil next year.
STATE COMPETITION
China’s state defense contractors are also trying to get into the low-cost market.
In December, the China Aerospace Science and Industry Corp (CASIC) successfully launched a low-orbit communication satellite, the first of 156 that CASIC aims to deploy by 2022 to provide more stable broadband connectivity to rural China and eventually developing countries.
The satellite, Hongyun-1, was launched on a rocket supplied by the China Aerospace Science and Technology Corp (CASC), the nation’s main space contractor.
In early April, the China Academy of Launch Vehicle Technology (CALVT), a subsidiary of CASC, completed engine tests for its Dragon, China’s first rocket meant solely for commercial use, clearing the path for a maiden flight before July.
The Dragon, much bigger than the rockets being developed by private firms, is designed to carry multiple commercial satellites.
At least 35 private Chinese companies are working to produce more satellites.
Spacety, a satellite maker based in southern Hunan province, plans to put 20 satellites in orbit this year, including its first for a foreign client, chief executive Yang Feng told Reuters.
The company has only launched 12 on state-produced rockets since the company started operating in early 2016.
“When it comes to rocket launches, what we care about would be cost, reliability and time,” Yang said.
(Reporting by Ryan Woo; Additional reporting by Beijing newsroom; Editing by Gerry Doyle)
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FILE PHOTO: A man uses phone under a Volkswagen logo at the Shanghai Auto Show, in Shanghai, China April 20, 2017. REUTERS/Aly Song
April 25, 2019
By Yilei Sun and Norihiko Shirouzu
BEIJING (Reuters) – German automaker Volkswagen AG’s joint venture with China’s Anhui Jianghuai Automobile Co (JAC) plans to invest 5.06 billion yuan ($750.8 million) in a new electric car factory in eastern Hefei city, according to local authorities.
A document posted online by the Hefei Economic and Technological Development Area on Monday showed that Volkswagen and JAC had obtained approval from environmental authorities to build a plant capable of producing 100,000 all-electric battery cars a year.
Volkswagen Group China on Thursday confirmed the numbers that had been included in previous official documents and said JAC-Volkswagen would launch its first model soon.
A spokesperson for the joint venture confirmed plans for the plant, saying the approval represented an “orderly advancement of the project”, and the venture’s first electric model, the E20X, will be launched this year.
GO GREEN
The German company, China’s largest foreign automaker with sales of 4.21 million cars on the mainland and Hong Kong in 2018, has pledged to ramp up production of zero-emission vehicles as part of its growth strategy in the country.
Volkswagen has said it plans to produce more than 22 million electric cars in the next 10 years, with over half of them built in China. It plans to launch 14 new energy vehicle models in China this year.
VW’s joint venture with JAC, approved in 2017, said last year it would launch a research and development center. It also planned to introduce the SEAT brand to China by 2020-2021.
Reuters reported this month that Volkswagen is in talks with South Korean battery maker SK Innovation to accelerate electric vehicle development.
China’s car market, the world’s largest, contracted for the first time last year since the 1990s. However, the new energy vehicle segment is still growing rapidly and NEV sales jumped 61.7 percent to 1.3 million units in 2018.
The China Association of Automobile Manufacturers has said new energy vehicle sales could hit 1.6 million units this year.
Volkswagen has started building a $2.5 billion new energy vehicle plant in Shanghai with SAIC Motor Corp Ltd, which will make VW’s luxury Audi AG brand cars.
SAIC Volkswagen said the new plant would have an annual capacity to make 300,000 cars and begin production from 2020.
(Reporting by Yilei Sun and Norihiko Shirouzu in Beijing; Editing by Christopher Cushing and Darren Schuettler)
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FILE PHOTO: Headquarters of the People’s Bank of China (PBOC), the central bank, is pictured in Beijing, China September 28, 2018. REUTERS/Jason Lee/File Photo
April 23, 2019
By Kevin Yao
BEIJING (Reuters) – China’s central bank is likely to pause to assess economic conditions before making any further moves to ease lenders’ reserve requirements, after better-than-expected growth data reduced the urgency for action, policy insiders said.
Although the central bank’s easing bias remains unchanged, it sees less room this year for cutting reserve requirement ratios (RRRs) – the share of cash banks must hold as reserves – as fiscal stimulus plays a bigger role in spurring growth, according to government advisers involved in internal policy discussions.
The People’s Bank of China (PBOC) is also worried that pumping too much cash into the economy could reignite bubbles over time, the policy insiders said, and wants to save some of its policy ammunition.
“In the short term, it’s not necessary to use RRR cuts to boost economic growth,” one policy adviser told Reuters. “Monetary policy should leave some room – if economic uncertainties rise or economic conditions deteriorate, the central bank could ease policy.”
The chance of a cut in benchmark interest rates, meanwhile, has further diminished, as the central bank focuses on reforming its interest rate regime this year, the policy insiders said.
LESS ROOM FOR RRR CUTS
China’s economy grew a steady 6.4 percent in the first quarter, defying expectations of a further slowdown, with factory output, retail sales and investment in March all growing faster than expected following a raft of expansion-boosting measures in recent months.
Still, economists do not expect a sharp recovery in the world’s second-largest economy, as many private firms grapple with high funding costs, while external demand may weaken in the coming months as the world economy loses steam.
Optimism is rising, however, that China and the United States will reach a trade deal in coming weeks.
“The possibility of seeing big policy changes is not big. We may maintain the strength of policy support but it could become more structural,” said a second policy source.
The PBOC did not immediately respond to Reuters’ request for comment.
The PBOC has cut RRRs five times since the start of 2018, lowering the ratio to 13.5 percent for big banks and 11.5 percent for small-to medium-sized lenders.
Central bank Governor Yi Gang said in March that there was still some room to cut RRRs, but less so than a few years ago.
The PBOC is likely to cut RRRs for small banks to encourage more lending to small and private firms – which are vital for economic growth and job creation – said the policy insiders, who have penciled in at least one such “targeted” RRR cut this year.
“Monetary policy will maintain counter-cyclical adjustments and keep liquidity ample as interest rates should go lower for the real economy,” said one of the policy insiders.
A Reuters poll, conducted before the first-quarter data release on April 17, showed economists expected the central bank to deliver three more RRR cuts of 50 basis points in each of the remaining three quarters of 2019.
But the stronger-than-expected growth data compelled some economists to trim their forecasts for RRR cuts. UBS now expects another 100 bps cuts this year, with the next one likely in June-July, instead of the 200 bps it had forecast earlier.
ECONOMIC UNCERTAINTIES LINGER
A statement on Friday from the Politburo, a key decision-making body of the ruling Communist Party, said China would maintain policy support for the economy, which still faced “downward pressure” and difficulties.
Authorities would strike a balance between stabilizing economic growth, promoting reforms, controlling risks and improving livelihoods, the Politburo said, adding that China would move forward with structural efforts to control debt levels and prevent speculation in the property market.
First-quarter economic growth was backed by record new bank loans of 5.81 trillion yuan ($865.61 billion) and local government special bond issuance of 717.2 billion yuan, which rocketed ninefold from a year earlier.
Beijing has ramped up fiscal stimulus, unveiling tax and fee cuts amounting to 2 trillion yuan to ease burdens on firms, while allowing local governments to issue 2.15 trillion yuan of special bonds to fund infrastructure projects.
Chinese leaders have pledged to ensure economic stability in a year that will mark the 70th anniversary of the founding of the People’s Republic, while vowing not to adopt “flood-like” stimulus that could worsen debt and structural risks.
The government’s target range for 2019 growth is 6-6.5 percent but growth of about 6.2 percent is seen needed this year and the next to meet the party’s longstanding goal of doubling GDP and incomes in the decade to 2020.
China’s growth slowed to a 28-year low of 6.6 percent last year, and further cooling is expected this year.
(Reporting by Kevin Yao; Editing by Alex Richardson)
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The logo of Exxon Mobil Corporation is shown on a monitor above the floor of the New York Stock Exchange in New York, December 30, 2015. REUTERS/Lucas Jackson
April 23, 2019
SINGAPORE (Reuters) – Exxon Mobil Corp said it has signed a 20-year agreement to supply liquefied natural gas (LNG) to China’s Zhejiang Energy, as the U.S. oil and gas giant steps up marketing of the fuel in China, the world’s second-largest buyer.
Under the sales and purchase agreement, Exxon Mobil will supply 1 million tonnes a year of the super-chilled fuel to the provincial government-backed Zhejiang Energy, Exxon said in a statement late on Monday.
The agreement, which follows a framework deal announced last October, did not give details on price or timing, or say where the supplies will be sourced.
Exxon Mobil said last year it would deliver the LNG starting in the early 2020s, while LNG supplies to China would come from its global portfolio.
The U.S. firm has been expanding its portfolio of LNG, including from upcoming projects in Mozambique, Papua New Guinea, Qatar and Golden Pass in the United States.
Zhejiang Energy is building a 9 billion yuan ($1.34 billion) receiving terminal for the fuel in Wenzhou, in the eastern province of Zhejiang, with annual handling capacity of 3 million tonnes.
Chinese state oil and gas major Sinopec will be a partner in the terminal.
Chen Zhu, managing director at Beijing-based consultancy SIA Energy, said the Exxon-Zhejiang deal was separate from U.S.- China trade negotiations under which Chinese firms are expected to eventually boost purchases of U.S. gas.
“The gas supplies to the Zhejiang firm will come from Exxon’s portfolio production outside the U.S.,” Chen said, adding that the Wenzhou terminal is likely to be operational in 2022 or 2023.
Exxon already has two long-term LNG supply agreements in China, one each with Sinopec and CNPC, China’s largest state oil group, she said.
(Reporting by Chen Aizhu and Jessica Jaganathan; editing by Richard Pullin)
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FILE PHOTO: Visitors attend the China Import and Export Fair, also known as Canton Fair, in the southern city of Guangzhou, China April 16, 2018. REUTERS/Tyrone Siu
April 22, 2019
By John Ruwitch
GUANGZHOU, China (Reuters) – Manufacturers in China facing trade barriers are deploying an array of moves to try to keep foreign customers – giving discounts, tapping tax breaks, trimming workforces and, occasionally, shifting production overseas to skirt tariffs.
Tit-for-tat tariffs from the China-United States trade war have been costly for many. Adding to the strain on Chinese manufacturers have been European Union duties on Chinese products ranging from electric bikes to solar panels.
March brought some encouraging news for manufacturers. Industrial output rose at its fastest rate since mid-2014 and exports rebounded more than expected, while first-quarter growth was better than expected.
Still, some manufacturers who depend on U.S. sales are struggling. At the Canton Fair in southern China this past week, they put on a brave face, but feared they will need to take more measures to survive if Beijing and Washington fail to seal a trade deal.
Botou Golden Integrity Roll Forming Machine Co lost some U.S. customers when tariffs pushed up prices for its machines making light steel girders and bars for building frames, according to Hope Ha, a saleswoman.
It now offers an 8 percent discount as a sweetener.
“We have to give discounts because they pay high tariffs,” said Ha.
Ball bearing maker Cixi Fushi Machinery Co gave long-term customers a 3-5 percent discount, according to representative Jane Wang.
But that was not enough, so the company suspended a product line generating $30,000 monthly revenue, she said.
“We will wait for the agreement and then we will see again,” she said. Now, the focus is on its main market, the Middle East.
Some have been able to pass along increased costs.
UNAVOIDABLE PRICE HIKES
California-based ACOPower has increased prices about 10-15 percent on some of its made-in-China, solar-powered refrigerators, said founder Jeffrey Tang.
“We have no choice,” he said. “We must increase the price.”
Tang says his portable fridges cannot be made affordably in other countries. But if there’s no trade agreement, and tariffs rise, the equation could change.
“Maybe I’ll just ship all the components to Vietnam to do the assembly.”
Aufine Tyre rented and filled a warehouse last year in California in anticipation of anti-dumping duties, which were later imposed. In another move to circumvent tariffs, it will soon open a plant in Thailand to make tires.
Jane Liu, a sales manager, said Aufine plans to send 50 containers a month from Thailand, with 220-240 tires in each, and later expand.
Some companies at the fair cheered Beijing’s move to trim China’s value-added tax to 13 percent from 16 percent at the start of April, and its pledge of tax rebates for exports.
“Things like this give us some protection or else we would suffer losses,” said Wills Yuan, a salesman at Ningbo Yourlite Import & Export Co in Shenzhen, which produces LED lights.
Shenzhen Smarteye Digital Electronics Co, a maker of surveillance cameras, which are not on the U.S. tariff list, was able to drop prices because of the tax break, according to sales manager Simple Yu.
“We save a lot on costs, so we can sell at a low price,” he said.
EXCHANGE RATE CONCERN
But Smarteye has worries, including increasing rent and labor costs that led it to trim its workforce.
Yu said he’s also concerned about the trade war’s potential effect on the yuan-dollar exchange rate. “Before it was 6.9 per dollar, now it’s 6.7 per dollar. We worry that it will go to 6.5.”
Electric bike makers have reacted nimbly to European anti-dumping duties of between 18.8 and 79.3 percent imposed in January. Many have started assembling some bikes in Europe; Zhejiang Enze Vehicle Co does so in Poland and Finland.
“We take the battery, frame, and the other parts, package them up separately and send them over to be assembled by partners,” said sales rep Dylan Di.
Anhui Light Industries International Co, which makes products ranging from plastic protractors for math to movie theater popcorn cups, says it has lost more than 1 billion yuan $149.2 million) after U.S. President Donald Trump raised import taxes.
Still, company representative Han Geng is optimistic the trade war will get resolved.
“It’s not good for America, not good for China,” he said, expressing the view that Trump knows the trade war is hurting business and “he will end it”.
When that day comes, Han said, “we will sell to America again… We need to make money. Everybody loves money.”
($1 = 6.7024 Chinese yuan)
(Editing by Simon Webb and Richard Borsuk)
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FILE PHOTO: A man walks past a sign board of Huawei at CES (Consumer Electronics Show) Asia 2018 in Shanghai, China June 14, 2018. REUTERS/Aly Song
April 22, 2019
HONG KONG (Reuters) – Huawei Technologies said on Monday its first-quarter revenue jumped 39 percent to 179.7 billion yuan ($26.81 billion), in the Chinese technology firm’s first-ever quarterly results.
The Shenzhen-based firm, the world’s biggest telecoms equipment maker, also said its net profit margin was around 8 percent for the quarter, which it added was slightly higher than the same period last year. Huawei did not disclose its actual net profit.
The limited results announcement comes at a time when Washington has intensified a campaign against unlisted Huawei, alleging its equipment could be used for espionage and urging U.S. allies to ban it from building next-generation 5G mobile networks.
Huawei has repeatedly denied the allegations and launched an unprecedented media blitz by opening up its campus to journalists and making its typically low-key founder, Ren Zhengfei, available for media interviews.
The Chinese firm, which is also the world’s No. 3 smartphone maker, said last week the number of contracts it has won to provide 5G telecoms gear increased further despite the U.S. campaign.
By the end of March, Huawei said it had signed 40 commercial 5G contracts with carriers, shipped more than 70,000 5G base stations to markets around the world and expects to have shipped 100,000 by May.
Huawei’s network business saw its first drop in revenue in two years in 2018. But Ren Zhengfei said in an interview with CNBC earlier this month that network equipment sales rose 15 percent while sales of the consumer business increased by more than 70 percent in the first quarter.
“These figures show that we are still growing, not declining,” Ren said.
Guo Ping, rotating chairman of the company, has said he expects all three business groups – consumer, carrier and enterprise – to post double-digit growth this year.
Huawei also said on Monday it had shipped 59 million smartphones in the first quarter. It did not disclose year-ago comparable figures, but according to market research firm Strategy Analytics, Huawei shipped 39.3 million smartphones in the first quarter of 2018.
(Reporting by Sijia Jiang and Julia Fioretti; Editing by Muralikumar Anantharaman)
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FILE PHOTO: A worker stands on the scaffolding at a construction site against a backdrop of residential buildings in Huaian, Jiangsu province, China October 18, 2018. REUTERS/Stringer/File Photo
April 19, 2019
BEIJING (Reuters) – China will maintain policy support for the economy, which still faces “downward pressure” and difficulties after better-than-expected first quarter growth, the Communist Party’s top decision-making body said on Friday.
The statement from the politburo came two days after China reported had steady 6.4 percent annual growth in January-March, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement.
“While fully affirming the achievements, we should clearly see that there are still many difficulties and problems in economic operations,” the official Xinhua news agency reported, citing a politburo meeting chaired by President Xi Jinping.
“The external economic environment is generally tightening and the domestic economy is under downward pressure.”
China will implement counter-cyclical adjustments “in a timely and appropriate manner”, while the pro-active fiscal policy will become more forceful and effective, and the prudent monetary policy will be neither too tight nor too loose, it said.
For this year, the government has unveiled tax and fee cuts amounting to 2 trillion yuan ($298.35 billion) to ease burdens on firms, while the central bank has cut banks’ reserve requirement ratios (RRR) five times since early 2018 to spur lending.
Further policy easing is widely expected.
On Friday, the politburo reiterated that the government will effectively support the private economy and the development of small- and medium-sized firms.Authorities will strike a balance between stabilizing economic growth, promoting reforms, controlling risks and improving people’s livelihoods, the politburo said.
China will push forward structural deleveraging and prevent speculation in the property market, it said.
“We should adhere to the orientation that houses are used for living, not for speculation,” the politburo said, reaffirming a city-based approach in controlling the property sector.
China’s economic growth is expected to slow to a near 30-year low of 6.2 percent this year, a Reuters poll showed last week, as sluggish demand at home and abroad weigh on activity despite a flurry of policy support measures.
(Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by Richard Borsuk)
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Eric Yuan, CEO of Zoom Video Communications takes part in a bell ringing ceremony at the NASDAQ MarketSite in New York, New York, U.S., April 18, 2019. REUTERS/Carlo Allegri
April 18, 2019
NEW YORK (Reuters) – Video conferencing company Zoom Video Communications opened at $65 per share on Thursday, 80.6 percent above its initial public offering price, in its debut on the Nasdaq.
Zoom priced its IPO on Wednesday at $36 per share, above its target range of $33-$35 per share.
(Reporting by Chuck Mikolajczak and Joshua Franklin in New York; Editing by Dan Grebler)
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FILE PHOTO: A general view shows the headquarters of Anbang Insurance Group in Beijing, China, February 23, 2018. REUTERS/Thomas Peter
April 17, 2019
BEIJING/SINGAPORE (Reuters) – China’s Anbang Insurance Group Co said it would reduce its registered capital by nearly one-third, the latest government-directed step of a massive restructuring of the debt-laden conglomerate to curb financial risks.
A state takeover work group, which has seized control of Anbang since February last year, has decided to trim the company’s registered capital to 41.5 billion yuan ($6.21 billion) from 61.9 billion yuan, pending approval from the China Banking and Insurance Regulatory Commission, Anbang said in a statement released on Tuesday.
The capital reduction will not influence the company’s operations or cause any major impact on its solvency and financial situations, Anbang said.
The move is the latest step by Beijing to steadily clean up the aftermath of a harsh government crackdown on Anbang – once one of China’s most aggressive dealmakers overseas with a series of major acquisitions that have caught the attention of global regulators and investors.
Anbang’s former chairman, Wu Xiaohui, who masterminded the overseas deal spree including the purchase of New York’s Waldorf Astoria hotel, was sentenced in May 2018 to 18 years imprisonment for fraud and embezzlement. His appeal against the conviction was rejected by a Chinese court in August last year.
Creditors of the company may request Anbang to pay off its debts or provide repayment guarantees within 45 days after the announcement, the company added.
(Reporting by Cheng Leng in BEIJING and Shu Zhang in SINGAPORE; Editing by Gopakumar Warrier)
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FILE PHOTO: A model of the nuclear reactor “Hualong One” is pictured at the booth of the China National Nuclear Corporation (CNNC) at an expo in Beijing, China April 29, 2017. REUTERS/Stringer/File Photo
April 17, 2019
By David Stanway
SHANGHAI (Reuters) – China plans to gamble on the bulk deployment of its untested “Hualong One” nuclear reactor, squeezing out foreign designs, as it resumes a long-delayed nuclear program aimed at meeting its clean energy goals, government and industry officials said.
China, the world’s biggest energy consumer, was once seen as a “shop window” for big nuclear developers to show off new technologies, with Beijing embarking on a program to build plants based on designs from France, the United States, Russia and Canada.
But after years of construction delays, overseas models such as Westinghouse’s AP1000 and France’s “Evolutionary Pressurised Reactor” (EPR) are now set to lose out in favor of new localized technologies, industry experts and officials said.
China signed a technology transfer deal with the United States in 2006 that put the AP1000 at the “core” of its atomic energy program. It also pledged to use advanced third-generation technology in its safety review after the 2011 Fukushima nuclear plant disaster.
But by the time the world’s first AP1000 and EPR made their debuts in China last year, Chinese designs had become just as viable.
Though China has yet to complete its first Hualong One, officials are confident it will not encounter the delays suffered by rivals, and say it can compete on safety and cost.
Beijing has already decided to use the Hualong One for its first newly commissioned nuclear project in three years, set to begin construction later this year at Zhangzhou, a site originally earmarked for the AP1000. [nL3N2152KM]
“The problem with AP1000 – the delays, the design changes, the supply chain issues and then the trade problems – has forced their hand, and it has become Hualong,” said Li Ning, a nuclear scientist and dean of the College of Energy at Xiamen University.
He added that China’s licensing procedures would also be an advantage for the home grown tech. “For the Hualong, there are four reactors already under construction and one of them is near completion already. It is a Chinese design so it wouldn’t be very hard to license the next four,” he said.
EDF, France’s state-run utility, which helped build the EPR project at Taishan in Guangdong province, declined to comment. Westinghouse, now owned by Brookfield after entering bankruptcy restructuring, also did not respond to a request for comment.
INTERNATIONAL AMBITIONS
China’s ambitions for the Hualong One extend overseas as well. The first foreign project using the reactor is under construction in Pakistan and the model is in the running for projects in Argentina and Britain.
“(Hualong One) is competitive,” said Li Xiaoming, assistant general manager of the state-owned China National Nuclear Corporation (CNNC). “The technologies are now just about the same as those of the United States, France and Russia.”
“This is the foundation that we will rely on for our future survival and our international competitiveness,” Li said.
China already has four Hualong Ones under construction, with the first, in the southeastern coastal province of Fujian, set to go into operation late next year, ahead of schedule, said Huang Feng, a member of the expert committee of the China Nuclear Energy Association.
“China has already become one of the small number of countries that has independently mastered third-generation nuclear power technology, and it has the conditions and comparative advantages to scale up and go into mass production,” he told an industry conference.
As Beijing gets ready to commission eight reactors a year in order to meet its 2030 clean energy and emissions targets, construction speed will be a crucial consideration, benefiting local developers.
Huang said the estimated costs of Hualong One and the AP1000 were now roughly the same, and much now depended on scaling up production to cut costs and allow the Chinese design to compete not only with other reactors, but also with coal-fired power.
Li of CNNC said while foreign-designed projects would still be built, it would “make no sense” to rely on foreign technology if China’s own domestic reactors were equally safe and reliable.
“There are probably some technologies where we will continue to cooperate, but overall we will gradually turn to our own,” he said.
($1 = 6.7139 yuan)
(Reporting by David Stanway; editing by Christian Schmollinger)
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