13.

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Mr. Lu then asked how we should proceed to put the Government authorities in touch with each other.

I said it was a pity Lord Carrington's visit to Beijing had had to be cancelled but suggested that contacts could be made either direct with the Governor in Hong

Kong or through the British Ambassador in Beijing, who no doubt was fully conversant with the subject.

Mr. Lu asked whether an approach should be made to countries other than the U.K., to which I replied that in the light of the political implications involved between the Chinese Government, the Hong Kong

Government, and the U.K. Government, I felt that at

this stage it was best to confine talks to these three.

The foundation would have to be built on their agreement

and later the building, i.e. choice of the nuclear

island, etc., was the time to consider other international

contacts.

14.

Mr. Lu said he had seen Dr. Marshall who had told him

that the Americans would insist on the inspections

required by the Non-Proliferation Treaty. China would

not agree to this consequently if this was so Westinghouse would be out of the running.

15.

Were we aware of Dr. Marshall's views and did we agree with him. I replied that Dr. Marshall was a world expert in his field and that he was probably right in what he had said, this particularly in the light of

the coming American election.

16.

Mr. Lu said we should talk to various suppliers. I agreed that we should listen to what they had to say; competition would be to our advantage but in my opinion

the French were in the lead in so far as nuclear reactors

(PWRS) were concerned.

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