Nuclear power vs people power

China’s leaders often are portrayed in West as all-powerful dictators. I can’t count the number of times I’ve heard American business executives assert that the secret of China’s rapid economic development is the ability of its communist overseers to steamroll domestic dissent. And yet the outcome of anti-nuclear protests this week in Lianyungang, a coastal city about 300 miles north of Shanghai, suggests the reality is a lot more complicated.

For months, Communist Party officials in Lianyungang have been doggedly moving forward with preparations to build a $15 billion nuclear waste recycling plant in the city. The project, to be run by state-owned China National Nuclear Corporation (CNNC) in collaboration with France’s Areva, is part of China’s nationwide push to lower its dependence on coal and triple nuclear energy capacity by 2020.

But the idea of having a nuclear waste facility in their backyard didn’t appeal to Lianyungang residents. And so, much like citizens in Western democracies, they took to the streets this weekend to express their dismay. Thousands marched on the city center Saturday and Sunday carrying placards and chanting anti-nuclear slogans, the whole spectacle (or much of it, anyway) broadcast via social media.

Authorities declared the demonstrations illegal. They ordered residents to disband, mobilized police and issued a series of increasingly ominous threats. The local party discipline committee warned demonstrators would be “seriously investigated and dealt with.”  And then what did the mighty Communist Party do next?

It caved. On Wednesday, the local government posted a notice on its website stating that plans to build the facility in Lianyungang had been suspended.

Environmental protests have become increasingly common in China, and since the 2011 meltdown of nuclear power plants in Fukushima, Japan, public suspicion of nuclear power has run especially high. Indeed, the Lianyungang protests are the third recent instance of local opposition forcing party leaders to unplug a nuclear project. As

China’s ruling party can be ruthlessly repressive. Critics claim it has tightened the screws on civil society under Xi Jinping. But on nuclear energy, Chinese leaders have shown restraint. As Financial Times correspondent Lucy Hornby observes: “People power–ironically for an authoritarian state–is now seen by the nuclear industry as one of the biggest stumbling blocks to growth.”

China still has grand plans for nuclear power. At the end of June, the country had 30 reactors in commercial operation and 20 more under construction. Beijing wants to have more than 100  nuclear plants in operation by 2030 and has vowed to spend at least $100 billion to achieve that goal.  The national legislature has embraced plans for China’s nuclear industry  to “go global,” exporting nuclear technology to both developed and developing economies.

For now, though, China is struggling to support its existing reactors and work out logistics like fuel processing, waste recycling, and grid access. If it is to solve those problems, it will have to come up with some way of dealing with local opposition.

The slowing economy affords some breathing room. Demand for electricity grew only 0.5% last year, down 14% in 2010, according to the China Electricity Council. But even at slower growth rates, China will need new energy sources soon, not just to cope with rising demand but to also deal with the nation’s horrific air pollution problem. (Currently, China relies on coal for more than 70% of its electrical power.)  Over the long term, China, like many democratic economies, is going to have to figure how to strike a balance between nuclear power and people power.

Shrinking Beijing?

If the Communist Party can’t force the people who live in cities to accept nuclear reprocessing plants, can it coax residents to leave cities by forcing their businesses out?  The Wall Street Journal reports this morning that Beijing is planning close or move “low-value” businesses and marketplaces deemed “unfit for the capital” in an effort to ease congestion, reduce pollution and lessen strains on the water supply. Will it work? Maybe. The government moved some of Beijing’s heaviest polluters to other cities to reduce pollution for the Beijing Olympics. But the process took far more time than planned and was only partially successful.

Wall Street Journal

What investors want from BABA: clarity

Investors are expecting Alibaba to report year-on-year revenue growth of 48% in the most recent quarter, a hefty jump that may help account for the relatively strong performance of BABA’s stock price in recent weeks. But the Journal says investors are increasingly skeptical of the companies metrics and concerned that the US Securities and Exchange Commission is investing some of its accounting practices.

Wall Street Journal

Who is the Chinese appliance maker taking over Germany’s most innovative engineering firm?

The FT says Germans are wary of the prospect that Kuka, one of Germany’s most innovative engineering companies, is on the verge of being sold to Midea, one of China’s largest consumer appliance companies. Midea has offered 4.5 billion euros for Kuka, which would make the deal the largest-ever Chinese takeover of a Germany company. This is a thorough, in-depth piece that explores the history of the two firms’ relationship, the strategic implications of the deal and also its complicated political dynamics. Germans may be grousing about the acquisition, but the fact is no other German firm came close to matching Midea’s bid. The Chinese company has agreed to series of complex “ringfencing arrangements” to protect Kuka’s customer data. The article is worth careful reading if only to dispell simplistic assertions about how advances in artificial intelligence and automation will unleash a wave of “reshoring” that brings manufacturing back to developed economies.

Financial Times

China’s box office bonanza goes bust

For the past year, the movie industry has been one of the few bright spots in an otherwise lackluster Chinese economy. But now Ent Group, which keeps tabs on global box office numbers, reports that Chinese ticket sales in the three months to June fell by 10%. That’s a staggering reversal for China and the first time for ticket sales to contract in five years.

What’s going on? Many analysts have speculated that the drop reflects the fact that Chinese cinemas have stopped offering huge discounts on ticket prices to lure people into their theaters. But the BBC wonders whether the decline is a harbinger of something more ominous: a sharp deterioration in the sentiment of Chinese consumers.

China has more than 31,000 screens, while the US has a total of 39,000, and most experts think it remains China on track to overtake the US as the world’s biggest movie market as early as next year.


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