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No
198
REY Action Taken
Our ref: AEF3 17/68/01C
DH Twyford Esq
Export Credits Guarantee Department
Aldermanbury House
Aldermanbury
London EC2P 2EL
Dear Donald
HONG KONG: SECTION 2 COVER
16 November 1978
С.С. HRGD
My attention has been drawn to the recent exchange of correspondence about the transmission line contract which recalls my unease earlier this year about the substantial exposure in this market generally, and in particular your liability in respect of the public utility CLP Group of companies.
In general conversation with Malcolm Stephens on this market he drew my attention to his letter of 11 October to the Department of Industry, which sets out very clearly the reasons for concern about the security for those contracts held by the CLP Group. Given this burden it is worrying that there is now some over-heating in the economy with a slackening in growth rate, largely attributable to protectionism by Hong Kong's major textile importers. It is most unlikely that the growth rates enjoyed since the 1960's will be achieved again, unless Hong Kong is able to diversify its economy. A trade deficit equivalent to £490 million in the first half of this year is of particular concern.
Given the warning signs I felt it essential that we should all take note of the need to look very carefully indeed 'at any future sizeable contracts that may come along. This is particularly so in respect of any further liabilities in relation to power generating and distribution
Yours sincerely Joan Kelley
MISS J KELLEY
cc D Shilson
B/E
J Ayres
FCO
P Twyman
DOT
M D Oldham
DOI
J Gill
ECGD
NE Hoult
ODM
M Hodgkiss
DOT
AC Hutton
DOT
J W Davey
MOD
M Stephens
ECGD
S N Chilton
DOI