Contrary to guidelines adopted in 1992 by nuclear equipment supplier states in the Nuclear Non-Proliferation Treaty (NPT), China is poised to export two power reactors to Pakistan. In April, Chinese officials said that export of the reactors to Pakistan would be justified in consideration of political developments in South Asia, including the entry into force of the U.S.–India deal and the Nuclear Suppliers Groups exemption for India. This transaction is about to happen at a time when China's increasingly ambitious nuclear energy program is becoming more autonomous.
Guidelines of the Nuclear Suppliers Group (NSG), representing 46 Non-Proliferation Treaty states, call on parties to the NPT not to supply nuclear equipment to non-nuclear-weapon states without comprehensive IAEA safeguards, including Pakistan. China joined the NSG in 2004.
The United States and other NSG states may object to the pending transaction but they cannot prevent China from exporting the reactors. Senior officials in NSG states friendly to the United States said in April they expect that President Barack Obama will not openly criticize the Chinese export because Washington, in the context of a bilateral security dialogue with Islamabad, may be sensitive to Pakistan's desire for civilian nuclear cooperation in the wake of the sweeping U.S.-India nuclear deal which entered into force in 2008 after considerable arm-twisting of NSG states by the United States, France, and Russia. The United States may also tolerate China's new nuclear deal with Pakistan because Obama wants China's support for United Nations Security Council sanctions against Iran this spring.
After years of bilateral disputes over nonproliferation issues, in 1998 the U.S. Congress allowed a 1985 Sino-U.S. nuclear cooperation agreement to enter into force. After that, U.S. nuclear cooperation with China dramatically increased, culminating in China's 2006 selection of a consortium of companies led by Westinghouse to build four AP1000 power reactors in China. Westinghouse bested bidders from France and Russia in a competition set up by China to determine which of the three would provide the technology blueprint for the future standardized development of China's nuclear power industry.
China chose Westinghouse after it agreed to transfer to China ownership of the technology for the new and untried 1,000-MW reactor. China then awarded contracts to Westinghouse and its partners to build four AP1000s in China. The first two are scheduled to be finished in 2013. Westinghouse scored another coup when in 2008 China selected AP1000 for China's first raft of inland power reactors.
Westinghouse's apparent emergence as first among foreign reactor vendors in China in 2006 was linked to the fortunes of the State Nuclear Power Technology Co. (Snptc). It was set up by China's State Council of Ministers to take charge of technology selection and transfer for China's future nuclear power program, after two decades during which China organized a handful of "boutique" reactor projects in cooperation with Canada, France, Japan, and Russia.
Shortly after China selected Westinghouse to shape its nuclear future, rival Areva made a separate deal with China to build two of its new EPR reactors in Guangdong Province in China's southeast, where French nuclear firms have been engaged since the late 1980s. Unlike Westinghouse, Areva also offered China a suite of fuel cycle technology options, and French officials hoped that a mammoth fuel cycle deal would coax China to continue building the EPR.
In the meantime, the ambitious construction schedule for the U.S.-designed reactors in China has come under heavy pressure. In part out of Chinese concern to keep construction on track, China's nuclear regulator, the National Nuclear Safety Administration (NNSA), will not agree to a proposal, favored by the U.S. Nuclear Regulatory Commission (NRC) and Westinghouse, to modify the design of the containment structure of the AP1000 to provide improved protection against an air crash. In the United States, NRC, after a design review prompted by post-9/11 concernsabout terrorist threats, asked Westinghouse to change the design of a shield building which is part of the containment and to use stronger materials. Westinghouse then urged China to also follow that advice.
China will not do that, Beijing officials said after consultations with Westinghouse and U.S. regulators. "China will build Revision 15," the AP1000 design version originally approved for construction in both the United States and in China, one official said. "It will not approve Revision 17," which incorporates the changes sought by NRC and Westinghouse, he said.
Changing the AP1000 design now would require construction in China to be halted and delayed. China also does not share NRC's view that a terrorist attack on reactors, using a hijacked passenger aircraft as a weapon, is a realistic enough scenario to warrant modifying the design.
The Westinghouse project has encountered other challenges which, so far, have not caused schedule delays. Last year, a key firm which is part of the technology transfer program, China First Heavy Industries (CFHI), failed to produce forgings to the required quality standard for the AP1000. Project executives said CFHI had difficulty handling the demanding steel material called for in critical components. The schedule was not set back because a Westinghouse partner in Korea, Doosan, had a stock of prototype forgings it had made earlier. The AP1000 has also encountered problems in main coolant pumps, which are of a unique design. Chinese officials said last year that further deployment of the AP1000 would depend on successful demonstration of these pumps, which were a critical feature of the passive cooling system billed as one of the key advantages of this reactor model. According to diplomats there have also been some Chinese bureaucratic delays for certain AP1000 project approvals.
Snptc also wants Westinghouse to increase the power of the reactor to 1,400 MW and then to 1,700 MW, matching the EPR. According to Snptc the 1,400-MW design will be ready for construction by 2013. Many foreign executives are skeptical that schedule will hold up.
Two years ago, China set up a brand new organization to take command of China's energy policy, including nuclear policy, the National Energy Administration (NEA). It is headed by Zhang Guobao, who strongly favors nuclear power development and who is also Vice-Chairman of China's leading planning agency, the National Development and Reform Council (NDRC).
NEA-which is staffed by about 170 experts, including fewer than 20 responsible for nuclear matters--cooperates with NDRC on setting planning targets, but NEA decides which reactors will be built, at what sites, and which state-owned enterprises will get contracts. It, Chinese officials said last month, will favor construction of more CPRs, and will also support China's biggest nuclear SOE, the China National Nuclear Corp. (CNNC) with a total payroll of over 100,000, in exporting more reactors to Pakistan.
China has long assisted Pakistan's nuclear energy program. In 1991 CNNC contracted with the Pakistan Atomic Energy Commission (PAEC) to build Chashma-1, a 325 MW power reactor. It was finished and began operating in 2000.
In 2004, China joined the NSG. China then explained to the NSG that a longstanding framework agreement with Pakistan committed China to provide a second reactor, Chashma-2, more research reactors, plus supply of all the fuel in perpetuity for these units. Chashma-2 construction began in 2005. Chashma-2 is scheduled to be finished in 2011. To keep CNNC at work in Pakistan thereafter, CNNC and PAEC negotiated terms for two 650-MW reactors, Chashma-3 and -4.
In 2006 Pakistan urged China to approve the new project but China was not keen to do so. Pakistan diplomats said then China was holding back because it was not clear that the U.S.-India nuclear cooperation deal would be approved by both governments and by the NSG.
After the U.S.-India deal was approved and India's NSG exemption entered into force without any Chinese objections in 2008, China's policy evolved to support demands by Pakistan for compensation, but China did not expressly advocate awarding Pakistan a broad exemption from NSG trade sanctions matching India's.
NSG country representatives said in late April they expect that the Obama administration will accept a limited amount of additional Chinese nuclear commerce with Pakistan as a price for getting Chinese support on UN Security Council sanctions against Iran in weeks ahead. Some suggested that the United States would also enlist China in this regard to persuade Pakistan to drop its opposition to negotiation of a Fissile Material Cut-Off Treaty, which Pakistan has said it could not accept because the U.S.-India deal had tilted the nuclear balance in South Asia in India's favor.
As long as Pakistan resists outside initiatives which would limit the autonomy of its strategic nuclear program, and because China is believed to be hiding behind Pakistan in avoiding making a firm FMCT commitment in light of China's strategic dilemmas with the United States, it is doubtful whether China would have effective influence on Pakistani decisions to halt fissile material production.
Senior NSG diplomats said this month that they expect that soon after China has completed political and contractual arrangements for the reactor sale to Pakistan, China will inform the NSG of its planned transaction. The matter could then be taken up by the NSG as an agenda item or point of business at a future NSG meeting. So far no NSG meetings are scheduled in 2010 prior to an annual plenary meeting in New Zealand in late June.
The U.S. State Department, in line with its response to a 1998 reactor export from Russia to India, continues to hold that a new reactor export by China to Pakistan would be contrary to both NSG and U.S. policy, but whether the United States would record an objection at the NSG or encourage other NSG states to do so would be up to President Obama following interagency discussions and consultation with foreign governments including Pakistan and China.
Chinese officials said in April that export of the reactors to Pakistan would be justified in consideration of political developments in South Asia, including the entry into force of the U.S.-India deal and the NSG exemption for India.
Source: The GovMonitor.com and Carnegie Endowment For International Peace