Osborne, who is in China with Amber Rudd, the Secretary of State for Energy and Climate Change, is now discussing Beijing’s proposed investment in the power plant.

The new plant is expected to open the door to further collaboration in the United Kingdom and China on the construction of new nuclear power stations.

Mr Osborne said nuclear power was “a crucial part” of Britain’s energy mix and hailed a “golden relationship between Britain and China – the world’s oldest civil nuclear power and the world’s fastest growing civil nuclear power”.

While on a five day tour of China, the Chancellor announced the new government guarantee, provided by Infrastructure United Kingdom , for a new nuclear power station planned for Hinkley Point C in Somerset. Further investment is also potentially available in the longer-term.

Vincent de Rivaz, chief executive of EDF Energy, said: “The Chancellor’s approval of the infrastructure guarantee is a clear sign of the Government’s commitment to Hinkley Point C. The Government’s determination to bring about a renewal of infrastructure and to attract inward investment to the United Kingdom are demonstrated by this good news”.

However EDF will continue to control the venture despite the Government and the Chinese adding financial muscle as they have been guaranteed a minimum price of £89.50 per MW hour for 35 years.

During the next 10 years, Britain is expected to need to replace around quarter of its capacity due to ageing nuclear and coal power plants retiring, which the new Hinkley Point power station will help achieve.

The final decision on investment in the plant could come during an expected visit to Britain by Chinese President Xi Jinping in October.

The building of the plant has not come without controversy. The analysts, too, questioned the economics of the project that at its cost of over $38 billion, as it could have combined other projects such as the London 2012 Olympics, Crossrail bill and the renovated Heathrow’s Terminal 2.

According to BBC News, Osborne said that the Chinese companies would receive a considerable worth of money at stake in the project while the United Kingdom acted as the guarantor for their investment.

Doug Parr, chief scientist for Greenpeace United Kingdom , said the loan guarantee announcement was “a PR smokescreen to give the impression that this project is moving forward when it’s actually bogged down in a swamp of troubles”. “We have the technology and funding in the United Kingdom and MPs must insist that the UK Government goes ahead with that”.