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CONFIDENTIAL
CHINESE INTENTIONS
3. Chinese Prime Minister told HMA in October that Guangdong
province had delegated authority to pursue proposal and that Chinese government favoured limited nuclear programme. Recent retrenchment measures (including 40% cutback in capital construction) seemed likely to delay project but no confirmation of this. Chief Secretary of Hong Kong told in Canton on 10 March that provincial authorities had approved feasibility study and would be submitting to central government. Time-
table for their consideration uncertain. But clear from recent contacts that Chinese regard credit terms as crucial. Unless UK can offer comparable terms to what they regard as very favourable French terms, our hopes for share of contract could be affected. ECGD and Treasury are unhappy about offering blank cheque, but essential at this stage to put down marker in general terms.
HONG KONG GOVERNMENT POSITION
4. Hong Kong government already rely on China for food and water and would agree to CLP offtake of electricity from Guangdong subject to satisfactory assurances on safety and environmental issues, security of supply and price.
UK POSITION
5. Good prospects for UK suppliers of conventional equipment, particularly turbines.
competence seem to have Guangdong in February.
Chinese doubts about GEC's technical been resolved by presentation in
But UK also interested in fuel supply
(BNFL) and enrichment services (URENCO), both of which have proven international capability.
6. GEC are negotiating 'exclusive' agreement with Framatome for joint bid for Guangdong. In February 1981 Ministers endorsed view that best hope of UK involvement lies in collaboration with French and approved idea of GEC/Framatome
agreement.
CONFIDENTIAL
77.