CONFIDENTIAL
Visits to Peking
6.
We have told the Chinese more than once (most recently on 21 October) that a high-level team is standing by. They have indicated they will issue invitations when appropriate. Lord Kadoorie expected to be visiting Peking in late November.
Credits
7.
3
Consensus interest rates will probably go up on 16 November. If HMG can decide on financial arrangements before then, the present rate of 7°/4% will apply (so long as a contract is signed with the Chinese within 6 months). This will need a submission to Ministers soon. Keith Newton has sent a first draft, asking for comments by 4 November.
Guarantees
8.
-
ECGD insist the Chinese should offer total credit guarantees. The Chinese, however, are prepared to guarantee only in proportion to equity stake, i.e. 60%. (The French have not announced their credit terms, but it is likely Coface their ECGD would also want 100% guarantees. The US position is not known.) This could be a sticking point. Newton's draft (4th paragraph on 3rd page) suggests as inducements 'counter-guarantees', such as one by Hong Kong to purchase the electricity (subject, presumably, to competitiveness on cost).
9. Mr Paul has minuted on the section in the draft on equity. The draft appears otherwise unexceptional.
Mr Stone's visit
10.
His dates in London are 31 October to 14 November.
30 October 1981
A W Friar
CONFIDENTIAL
Α
B