By Guy Faulconbridge and Kate Holton
LONDON (Reuters) - Chinese President Xi Jinping will preside over the signing of a deal to build a nuclear power station in Britain on Wednesday as Prime Minister David Cameron seeks to clinch $46 billion in contracts with the world's second-largest economy.
After a day of pomp on the first full day of Xi's state visit to Britain, the Chinese leader will turn from pageantry to politics and business at talks with Cameron in his Downing Street residence and a London business summit.
The jewel in the crown of the business summit is expected to be an announcement that state-owned utilities China's General Nuclear Corporation and National Nuclear Corporation will take a multi-billion pound minority stake in the Hinkley Point nuclear plant in Somerset owned by France's EDF.
"A growing China-UK relationship benefits both countries and the world as a whole," Xi told a state banquet at Buckingham Palace hosted by Queen Elizabeth on Tuesday night.
Cameron is pitching Britain as the pre-eminent Western gateway for investment from China, though the warmth of the reception for the Communist leader has raised some eyebrows with allies and drawn criticism that London is ignoring human rights.
Protests against Xi have been small so far, though activists have accused Cameron of seeking to court Chinese money by brushing aside criticism of a crackdown in civil liberties since Xi came to power in 2012.
British officials and business leaders say the rise of China is impossible to ignore: China's economy is four times the size of Britain's.
"The Chinese economy has been one of the drivers of global growth, and I think that will continue," Cameron told China Central Television. "We encourage investment, and China is investing more in Britain now than other European countries."
China has feted Britain for a visionary choice to strengthen ties, though some British lawmakers have pressed Cameron to raise the issue of cheap Chinese steel imports after over 4,000 jobs were thrown into jeopardy at steel plants across Britain.
In an attempt to cash in on big-spending Chinese middle classes, Britain said it would introduce a cheaper two-year multiple-entry visa that will require fewer supporting documents.
In what is likely to be the biggest deal of Xi's visit, Chinese utilities will take a stake in a 16 billion pound EDF power station project in Somerset. The Chinese investment was agreed in principle in October 2013 but has taken until now to be finally agreed.
The deal brings Britain's first new nuclear plant since 1995 a step closer and is also a boost for EDF, which has been hit by billions of euros of cost overruns and years of delays with two of its other European nuclear projects in Finland and France.
As part of the deal, EDF may agree to cede leadership on a subsequent new nuclear project at Bradwell, east of London, to the Chinese partners who want to bring their own nuclear reactor technology to Britain.
The prospect of China, which Western spymasters say sponsors hacking of global companies, helping to build a nuclear plant in Britain and being involved in running others has stoked security concerns in Britain.
Steve Hilton, a former policy adviser to David Cameron, told the BBC that Britain should impose sanctions on China for political oppression and cyber attacks instead of rolling out the red carpet.
"This is one of the worst national humiliations we've seen since we went cap in hand to the IMF in the 1970s," said Hilton, who left Downing Street in 2012, referring to the 1976 crisis during which Britain was forced to ask for a loan from the International Monetary Fund.
"The truth is that China is a rogue state just as bad as Russia or Iran, and I just don't understand why we're sucking up to them rather than standing up to them as we should be."
China has strongly denied previous accusations of espionage, saying it is itself a victim of cyber attacks.
(Writing by Guy Faulconbridge, Additional reporting by Karolin Schaps, Editing by Angus MacSwan)