CONFIDENTIAL
GUANGDONG NUCLEAR ICWER IROJECT: FOSSIBLE FRENCH INVOLVEITHT
Tress reports on Saturday 18the October suggested that Chino has agreed to buy two nuclear power planto from France, the agreement having been reached during the recent virit of the French President Giscard d'Estaing.
Background
France's interest in establishing nuclear cooperation with China started in the mid-1970s with non-commercial contacts between research organisations. This developed into treining of Chiner engineers in French nuclear establishments. During 1977 the French Government and industry started confidential talks in Feking over the possibility of selling 2 900 MW FIR muclear power stations. These talks became public knowledge in 1978. At the peakof their efforts, the French had a teamof 40 resident in Teking and the total cost involved was estimated as som FF 25m (3m).
During March 1979, the Chinese apparently de ided not to pursue the negotiations but did not tell the French. until June 1979. The official reason given was the readjustment of economic targeta, but it is believed that the high cost of the project was e injor factor as was a move in Ching away from imported nuclear technol- ogy towards a more donertically oriented policy based on coal o hydro-lsetric plants. The French however lost no opportunity in stressing to the Chinese that their amour propre vas involved and that ruffled feelings could only be assuaged by compensating projects.
Latest Fonition
Information on any agreement reached during the French President'a visit is scant. Ib was clear from Be press reports however that the agreement vas neither contractual nor definitive. The reports from our Embassy in Felting as well as from Hong Kong suggest thayb when Fresident Giscard was in Taking'he was given an oral promina by Vice Trenier Gu Tu that the first foreign reactor built in China would be French, This assurance was probably repeated by Frime Minister Zhao. The agreement was therefore "an understanding and no detailed offer has been made or cite chogen. COFACE (Bha French equivalent of ECGD) indeed know nothing of any financial terms and the Guangdong Trovincial Government told the Hong Kong Governor on 20th October that they know nothing about any dinenu-- sions with the French Dresident in Foking, Rather they reitera- ted that there were still discussions in Guangdong about whether to go for a French or American reactor, but that this had still to be settled and would depend on the recommendation of the joint feasibility study between KHC and CLF.