KI
GR 450
IMIATE
CYPHER CAT A
FM FCO 21192OZ
CONFIDENTIAL
DESKBY 2203OOZ
CONFIDENTIAL
TO IMMEDIATE PEKING TELNO 390 OF 21 JULY
INFO IMMEDIATE HONG KONG
HONG KONG COAL DEAL
PA
HKK164/1
RELAT
24 JUL 1978
PA
NG.
R
186
No
See 188
89
MIFT CONTAINS THE DRAFT TEXTS OF A LETTER FROM LIPPITT TO
KADOORIE 11 A MEMORANDUM FROM HMG ON THE HONG KONG COAL DEAL TO BE PASSED TO THE CHINESE: AND 111 A DRAFT LETTER FOR KADOORIE TO SEND TO SUN SUO-CHANG, PREPARED BY HIS LONDON REPRESENTATIVE, MR DEIRE MATHEWS OF SCHRODERS.
2. YOU WILL APPRECIATE THAT, IN DRAFTING DOCUMENTS I AND PARTICULARLY VI WE HAVE HAD TO CONDUCT A BALANCING ACT BETWEEN SEVERAL IMPORTANT
POLICY CONSIDERATION.
3. ON THE ONE HAND, AS REGARDS CUR EXPORTS TO CHINA, WE WISH HMG TO GIVE A FAIR WIND TO THE SPECIFIC COAL FOR COAL MACHINERY, ELECTRICAL TRANSMISSION OR POWER-STATION DEAL, PROVIDED THAT THIS DOES NOT DISRUPT OR REPLACE CURRENT OR PROSPECTIVE DEALS ON OTHER ACCEPTABLE AND IN SOME CASES PREFERABLE TERMS OF PAYMENT, AND PROVIDED THAT IT IS WITHOUT HMG ASSUMING COMMERCIAL RESPONSIBILITY. AS REGARDS OUR EXPORTS TO HONG KONG WE ARE ALSO CONCERNED TO REMAIN
ON GOOD TERMS WITH KADOORIE.
4. BUT FROM THE ASPECT OF OUR GENERAL COMMERCIAL POLICY TOWARDS CHINA, THERE MUST BE NO IMPLICATION, PARTICULARLY TO THE CHINESE, THAT HMG FAVOURS COUNTER-TRADE AS A GENERAL POLICY, NOR THAT THE KADOORIE INTERESTS ARE OUR CHOSEN INSTRUMENT FOR EXPORTING TO CHINA EITHER GENERALLY OR THROUGH COUNTER-TRADE, NOR THAT BUSINESS ARISING OUT OF THE ALTERNATIVE STUDIES MENTIONED IN THE MEMORANDUM, WHICH MIGHT MATURE TO AN EXTENT GOING BEYOND THE CHINESE COAL PURCHASES AND THEREFORE THE POTENTIAL KADOORIE DEAL, SHOULD NECESSARILY BE
BY COUNTER PURCHASE.
CONFIDENTIAL
15.