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STATEMENTS MADE TO ME BY MR. SHIK:

1) THAT THEY FULLY UNDERSTAND THAT 1, AS CHAIRMAN OF THE CHINA

LIGHT AND POWER CO. LTD., - WHICH COMPANY IS BASED IN BRITISH ADMINISTERED TERRITORY, SHOULD BE BIASED TOWARDS PURCHASING BRITISH PLANT AND THAT THEY NO LONGER CONSIDER MY NEUTRALITY DURING NEGOTIATIONS TO BE IMPORTANT.

1)THAT TOP LEADERS OF THE PRC ARE ACTIVELY INTERESTED IN THE

PROJECT AND IT HAS BEEN MENTIONED IN CONVERSATIONS WITH SIR

MURRAY MCALEHOSE, SIR JACK CATER AND SIR PHILIP HADDON-CAVE. 111) THAT THE KEC WOULD WELCOME, AND HOFE I WILL OBTAIN, BOTH

U.K. AND HONG KONG GOVERNMENT PARTICIPATION IN THE PROJECT:

ALSO THERE HAVE BEEN VERBAL HINTS,

IV) THAT PROJECT OF THIS MAGNITUDE ON A JOINT VENTURE BASIS IN

WHICH THE UK AND HONG KONG GOVERNMENTS WOULD PARTICIPATE HAS POLITICAL OVERTONES WITH THE PRC.

NOTE:

THE FOLLOWING EXTRACT FROM NOTES ON MANAGEMENT GROUP MEETING NO. 8 HELD FROM JUNE 27 -30, 1980, IS RELEVANT.

.... HE (MR. CHEN GANG) WOULD, HOWEVER, REFLECT THESE IDEAS

TO THE GUANGDONG PROVINCIAL GOVERNMENT AND THE STATE COUNCIL WITH

WHOM THE FINAL DECISION ON THE PROJECT LAY. HE MENTIONED THAT THIS

PROJECT WAS KNOWN TO THE CHINESE LEADERS INCLUDING CHAIRMAN HUA

KUO FENG, MR. DENG XIAO PING (VICE PREMIER), MR. LI XIAN NIAN (VICE PREMIER), MR. HU YAG BANG (PARTY GENERAL SECRETARY),

MR. ZHAO ZI YANG (VICE PREMIER) AND MR. GU MU (VICE PREMIER AND HEAD OF STATE CAPITAL CONSTRUCTION COMMISSION) AND THAT HE HAD

BEEN AT MEETINGS ON THE PROJECT AT WHICH MORE THAN TEN MINISTERS

WERE PRESENT''

7) MY IMPRESSIONS, GAINED BY LONG ASSOCIATION WITH THE CHINESE, ALL INDICATE THAT THE DESIRE TO BUILD A NUCLEAR POWER STATION ON

A JOINT VENTURE BASIS MAY NOW WELL BE PART OF A 'FACE SAVING'

EXERCISE TO EXTEND THE STATUS QUO IN THE RELATIONSHIP BETWEEN THE PRC AND HONG KONG EVEN THOUGH THIS MAY NOT HAVE BEEN THE ORIGINAL INTENTION.

8) WHEN I FIRST HAD THE PLEASURE OF MEETING YOU, I ASKED YOUR COOPERATION OVER A LARGE POWER STATION PROJECT FOR HONG KONG -

COOPERATION, FREELY GIVEN, WHICH HAS RESULTED IN THE PLACING OF ORDERS AMOUNTING TO SEVERAL HUNDRED MILLION POUNDS WITH BRITISH MANUFACTURERS. TODAY, MY REQUEST IS FOR YOUR CONSIDERATION OF A PROJECT THAT HAS FAR GREATER IMPLICATIONS. IT COULD BE THE FUTURE

OF HONG KONG THAT WE ARE TALKING ABOUT.

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/ 9) CHINA'S

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