CONFIDENTIAL
with them older machinery which is becoming obsolescent in Hong Kong terms. This will accelerate the trend towards diversification and moving up-market which has already been apparent for some years as a result of similar movements to less developed, cheaper, countries.
10.
Whilst Peking's present policy of economic 'readjustment' (retrenchment) may act as a brake on ambitious capital construction plans in Guangdong or elsewhere, the signs are still promising that the Chinese plan to go ahead with some form of joint venture to build a nuclear power plant in Guangdong and pay the foreign exchange costs by selling electricity to Hong Kong, Such sales would add substantially to Guangdong's earnings from Hong Kong. Since the power station would have to be paid for over a long period of time such an arrangement would also have implications well beyond the supply of electricity.
11.
The province has shown interest in making available Chinese labour for 'overseas' projects (including Hong Kong). The Hong Kong Government have made clear that only limited numbers of specialists and technicians can be allowed to come to work in the territory. Various schemes have also been proposed for the construction of housing estates in Shenzhen, with residents commuting to work in Hong Kong. The time taken to make such regular journeys between Shenzhen and the urban areas (or even the New Territories) would appear to rule out any significant development along these lines in the near future.
Political Adviser's Office
Government Secetariat
Hong Kong
22 January 1981
CONFIDENTIAL