The Nuclear Silk Road Whats Behind the U.S.-China Trade War? Whats - - PowerPoint PPT Presentation

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The Nuclear Silk Road Whats Behind the U.S.-China Trade War? Whats - - PowerPoint PPT Presentation

Oct 21, 2022 257 likes •688 views

The Nuclear Silk Road Whats Behind the U.S.-China Trade War? Whats Ahead? James Joosten (c) Connect-USA LLC 2019. Are Chinas Nuclear Construction Plans Doable? 150GWe Installed by 2030 GWe 250 CGN 2016 LOW CGN 2016 HI WNA 2017 REF

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The Nuclear Silk Road

What’s Behind the U.S.-China Trade War? What’s Ahead?

James Joosten

(c) Connect-USA LLC 2019.

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Are China’s Nuclear Construction Plans Doable?

2.2 10.8 26.1 58 150

50 100 150 200 250 2000 2005 2010 2015 2020 2025 2030 2035

CGN 2016 LOW CGN 2016 HI WNA 2017 REF

Year GWe

141

150GWe Installed by 2030

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China’s Remarkable Period of Economic Growth

Downtown Shenzhen 1980

1980  today

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SHENZHEN AREA 1980

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SHENZHEN 2019

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GUANGZHOU 1980

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GUANGZHOU 2019

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SHANGHAI 1987

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SHANGHAI 2013

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Record Scale Construction Projects

HONG KONG-ZUHAI-MACAO BRIDGE - 34 MILES THREE GORGES DAM — 22,500 MWE

World’s Largest Hydro Plant World’s Largest Sea Crossing

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Record Construction Times

CHANGSHA Mini Sky City Building: 57 STORIES —> 19 DAYS

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World’s Largest Nuclear Construction Program

As of October, 2019:

  • 48 Operable Reactors (48.3 Gwe)
  • 9 Reactors Under Construction
  • 3 New Reactor Starts in 2019
  • 31 Planned Reactors (32GWe)
  • Uranium Requirements: 9209 tU/yr
  • Uranium Stocks: 100,000+ tU
  • Of the nine reactors connected to

the grid worldwide in 2018, seven were in China.

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TAISHAN EPR Reactors

Flamanville 3 - Construction Start Nov 2007 — Grid Connection: 2023? Olkiluoto 3 - Construction Start Nov 2007 — Grid Connection: 2020? Taishan 2 - Construction Start Apr 2010 — Grid Connection: Sept 2019 Taishan 1 - Construction Start Nov 2009 — Grid Connection: Dec 2018

Started Later, Completed Before European EPRs

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AP-1000 Reactors

Sanmen Units 1 & 2

China: Two already on line

Vogtle 4 - Construction Start Nov 2013 — Grid Connection: 2022? Vogtle 3 - Construction Start Mar 2013 — Grid Connection: 2021? Sanman 2 - Construction Start Dec 2009 — Grid Connection: Nov 2018 Sanman 1 - Construction Start Apr 2009 — Grid Connection: Sept 2018

Vogtle 3 & 4

USA: 79% complete

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So Are China’s Nuclear Construction Plans Doable?

2.2 10.8 26.1 58 150

50 100 150 200 250 2000 2005 2010 2015 2020 2025 2030 2035

CGN 2016 LOW CGN 2016 HI WNA 2017 REF

Year GWe

141

ABSOLUTELY !

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What’s the Silk Road Got to Do With It?

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Ancient Silk Road

PHOTO: Commons.Wikimedia.org

(200 BC – 1450 AD)

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21st Century Silk Road (aka Belt & Road Initiative): US$4 Trillion to US$8 Trillion in New External Construction Projects

Xi Jianping

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BRI: Chinese Reactor Exports

  • CNNC: Already “Sold” 8 reactors to seven countries

and is in talks with more than 40

  • Pakistan: Karachi 2& 3 (Hualong One) in progress

(China lent $6.5bn to Pakistan to help fund the $9.6bn project)

  • UK: Hinkley Pt. & Bradwell B (Hualong One expected)
  • Romania: Agreement to complete Cernavoda 3&4
  • Argentina
  • More Prospects in: Algeria, Australia, Bangladesh,

Egypt, Ghana, Italy, Jordan, Kazakhstan, Kenya, Mongolia, Morocco, Namibia, Nigeria, Oman, Philippines, Saudi Arabia, Senegal, Sudan, Uzbekistan

CNNC: “China could build as many as 30 overseas nuclear reactors. BRI nuclear projects could earn Chinese firms as much as US$145.52 billion by 2030”

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BRI: Some Uranium Activities

  • CNNC/CNNC-URC/SinoU/Sinosteel:
  • Niger (Azelik, Imouraren)
  • Kazakhstan (Zalpak)
  • Namibia (Langer-Heinrich,Rossing)
  • Mongolia
  • Uzbekistan
  • Algeria
  • Zimbabwe
  • Canada
  • South Africa
  • Greenland
  • Australia (PepinNini Minerals)
  • Krygystan
  • CGN/ Sino-Kazakhstan/CGN-URC/CGN Global:
  • Kazakhstan (Irkol, Semizbal)
  • Uzebekistan (Navoi Mining, Goskomgeo)
  • Namibia (Husab)
  • South Africa (UraMin/ Areva)
  • Canada (Fission Uranium Corp/Patterson Lake)
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So What’s Driving the Trade War

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  • 1. An Unsustainable Trade Deficit with China
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  • 2. Threat from China’s Growing Economic Power

China’s Economy Could Soon Overtake and Displace United States

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  • 3. IP Theft, Espionage, Forced Tech Transfers

Annual IP Theft Losses: over US$300 billion CGN added to Dept of Commerce “Entity List” Some major nuclear espionage cases (Alan Ho Lee) DOE Labs banned hiring foreign scientific talent in August 2019

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  • 4. BRI Construction being used for Chinese

Naval Expansion & Modernization

Concern SMR technology to be adapted to Chinese submarines, aircraft carriers, ice breakers and land bases

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#1 National Security Concern Today: South China Sea

1/3rd of World’s shipping ($3 trillion) passes through South China Sea each year 40% of China’s total trade in 2018 80% of Global Trade by volume Major UN territorial disputes with China

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China’s Rapid Island Building in the Spratlys

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Subi Reef: July 2012

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Subi Reef: November 2017

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  • 5. Silk Road Debt Trap Diplomacy

Hambantota Port, Sri Lanka Djibouti Port Strategic Choke Point

Image: Columbo Gazette

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Potential for China’s Silk Road Loans to Buy UN Votes and Influence World Policies

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The Question No One is Asking:

Where is all that construction money coming from?

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China’s Dramatic Growth Relies on Dramatic Loans (Debt Financing)

China’s current debt is now a staggering: US$ 42-48 trillion! China’s debt has grown about 1000% over last decade As of Q1, 2019, China’s debt level exceeded 300% of GDP

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Most new debt is coming from Shadow Banking

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What is Shadow Banking?

It’s complicated. Typically refers to financial lending transactions that are done outside of normal, regulated, banking channels (i.e., off-the-books.) Effectively ’Borrowing from Peter to pay

  • ff a short-term loan with Paul’. Then

borrowing from John at a higher interest rate to pay Peter, and from Fred to pay John, etc. No one - not even the Chinese government - currently knows the full extent of Shadow Banking loans within China and overseas by China’s State Owned Enterprises (SOEs).

Source: https://www.bis.org/publ/work701.pdf

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What’s Ahead?

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Debt Trap Diplomacy Now Seeing Pushbacks

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Shadow Loans

Manageable debt? Gigantic Economic Bubble?

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Declining GDP Growth Rate

GDP Growth Rate for 2019 Now Projected at 5.9% China’s Debt Service Now Growing Faster than GDP Bank Loan Defaults Occurring at Record Levels

Central Bank Foreign Exchange Reserves

China’s Cash Crisis

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Declining Expenditures for Foreign Uranium Exploration & Development

200 400 600 800 1000

2014 2015 2016 2017 Domestic Non-Domestic (US$ Millions)

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Reactor Construction Starts: Slowing or Growing?

Reactor Construction Starts

1 2 3 4 5 6 7

2015 2016 2017 2018 2019 2020 Actual 13th Five Plan Target

Installed Nuclear Capacity

48.3 58

10 20 30 40 50 60 70

GWe

Current 2020 Target

Averaging only 2.2 construction starts per year since 2015 Debt Crisis onset

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Closing Thoughts

  • China is “too big to fail” at present. USA will take a necessary but phased approach to economic war

with China and the trade deficit. Chinese tariffs likely will be lifted during the election year. But watch

  • ut in 2021 when major economic war breaks out. Yuan could devalue 20%-40%.
  • Kazakhstan will likely escape most tariffs/sanctions due to its strategic importance to USA in the region.
  • Enhanced surveillance and tightening of export controls on nuclear technology and services to Russia

and China – particularly SMRs due to their linkage to Chinese nuclear navy, ice breakers, and military base applications. A high risk for IP theft of U.S. SMR technology to low cost vendors.

  • Chinese domestic and BRI reactor construction starts will remain highly uncertain until the debt crisis is
  • stabilized. Expect continuation of recent trend (about 3-5 new construction starts in 2020 during new

credit easing period but settling in at a modest 2-3 per year after that). Note: Despite expected economic recession, some new construction is necessary for Chinese labor stability.

  • China could liquidate some of its excess (10x needs) U inventory to support its foreign reserves or due

to capital flight if the debt crisis worsens; alternately, party oligarchs could increase off-shore uranium inventories effectively creating an off-shore bank for parking USD in the form of U.

  • Spot prices seem likely to remain very soft throughout the 2020s.
  • Utilities may increasingly move away from Central Asian suppliers towards Western intermediaries,

Western producers, and more term contracts so as to reduce geopolitical risk.