CONFIDENTIAL
Bile
laves-Smith
sq
(verzorg Finnce @rojects Division wrilish (vorseas Trade Board Lepartment of Trade and Industry
1 Victoria Street
PA
2
4 Junury 1973
A
259) Anev
ROPS CG INSS TRANSIT SCHEME
1. Then you for your letter of 29 December about possible Chinese participation in the UK consortium bid.
2. Mr Codd is, in fact, wrong in thinking that either the Hong Tone Government or the FCO would welcome Chinesc parti- ciptions such in the scheme. I think I know where he may have ol this impression, but the reverse is the case.
3. I suggest therefore that GEC should be gently disabused of the idea that, if they got themselves a Chinese partner, this world give them a political edge over the Japanese. would be much more likely to do the opposite.
It
4. All the indications are anyway that the Chinese would not went to participate. But, given our attitude and that of the Hong Kong Government, I think it would be unwise for the consortium even to sound them out. The Hong Kong Government and the FCC would also be opposed for political as well as security and immigration reasons to the use of Chinese labour on the project.
5. But the use by the consortium of Chinese materials such as cement, steel rails or tunnel segments would not give rise to the same problems. Indeed there could be presentational advantages, since trade with China is in Hong Kong's interest. I doubt, however, whether this is likely to be a major factor in the longong Government's judgement. I think that there would be no call at this stage for the consortium to do more than make it clear to the Hong Kong Government, if they wish, that they are willing to buy in certain materials from China if the Hong Kong Government agrees and if the materials are on offer at the right price.
CONFIDENTIAL
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