China is increasing its collaboration with Pakistan in the field of civil nuclear energy, aiming to expand its presence in the global nuclear power market. A nuclear energy deal Pakistan signed with China in June, reportedly worth $4.8bn, might appear a curious move on Beijing's part.
Despite the financial challenges faced by Pakistan's power sector, China views the partnership as a strategic move rather than purely economic. By constructing nuclear power plants in Pakistan, China aims to establish a track record for its nuclear industry, which it can leverage to enter more profitable and less constrained nuclear markets worldwide.
The recent nuclear energy deal between China and Pakistan involves the construction of a 1,200-megawatt plant at the Chashma nuclear power complex in central Pakistan. This facility will feature the Hualong One, China's first domestically developed civil nuclear reactor. China has previously supplied this type of reactor to a power station in Karachi, with two units becoming operational in the past few years. Alongside domestic projects, China has become a prominent builder of nuclear plants and aims to construct 30 overseas reactors by 2030, primarily in countries participating in its Belt and Road Initiative.
While Pakistani Prime Minister Shahbaz Sharif highlighted the energy security benefits and the provision of affordable electricity, experts suggest that China's motivation lies in showcasing its indigenous nuclear reactor technology as safe, reliable, and cost-effective. China aims to compete with other nuclear power exporters globally and solidify its position in the international nuclear power market.
“This project is part of our energy security plan to diversify the energy mix with a focus on ensuring the provision of cheap electricity to the industry & relief to the common man," Shahbaz Sharif tweeted
The prime minister also said China provided a "discount" of $100mn despite facing delays during the tenure of the previous Pakistan Tehreek-e-Insaf government, led by ousted Prime Minister Imran Khan.
China's collaboration with Pakistan has been instrumental in addressing Pakistan's long-standing energy challenges. Through the China-Pakistan Economic Corridor (CPEC), a component of the Belt and Road Initiative, China has assisted in building energy infrastructure, including coal-fired power plants and hydropower projects. However, Pakistan's reliance on costly fuel imports, rupee devaluation, and a balance of payments crisis have strained its financial resources. Pakistan defaulted on payments amounting to $1.5bn to Chinese-operated coal plants, and the importation of coal has been hampered, leading to a halt in operations for many plants and a suspension of new coal power projects.
Zongyuan Zoe Liu, a fellow for international political economy at the Council on Foreign Relations, stated that China does not have much experience exporting nuclear power plants and that president Xi Jinping prioritized foreign reactor sales only after his 2021 pledge at the United Nations General Assembly to stop building overseas coal-fired power projects.
"In this context, it does not make practical sense for Chinese nuclear reactor exporters to charge a high markup. What is more important for China is to demonstrate to the world that it has indigenous technology for nuclear reactors that are safe, reliable, and affordable. This is, in the long run, in China's interest to compete with other nuclear power exporters in the global markets," she said.
Despite economic uncertainties, China intends to keep its assets active in Pakistan, primarily due to the existing supply chain and workforce related to the Hualong One project. Additionally, China's cooperation with Pakistan has raised concerns among the Nuclear Suppliers Group (NSG), an organization of 48 countries that governs civilian nuclear trade. As Pakistan is not a signatory to the Nuclear Non-Proliferation Treaty and adheres only to facility-specific safeguards of the International Atomic Energy Agency (IAEA), rather than the more comprehensive full-scope safeguards required for nuclear trade, the NSG has expressed reservations about China's exports to Pakistan.
China argues that its exports to Pakistan are permitted under agreements predating its entry into the NSG in 2004. However, NSG members contend that exports made after China's entry should adhere to the full-scope rule, which allows the IAEA to inspect both civil and military nuclear facilities. The issue raises questions about the compliance of China's nuclear cooperation with Pakistan within international guidelines.
As China positions Pakistan as a nuclear power export springboard, its long-term goals are to establish a competitive presence in the global nuclear power market and solidify its influence in multilateral governance over nuclear power. However, the economic challenges faced by Pakistan and concerns raised by the NSG highlight the complexities and potential implications of this strategic partnership.
Comments (0)