CONFIDENTIAL
OPTION 2 - UK goods only
ECGD have calculated that the subsidy elements would be 37.20% over 12 years and 38.85% over 15 years.
Advantage
Disadvantage
OPTION 3
-
the least costly option
most unlikely to be acceptable to the Chinese when
viewed against the Castle Peak packages and therefore
destructive to the credibility of the negotiated contract
approach.
UK goods plus locals
Subsidy of 43.76% over 12 years and 45.71% over 15 years.
Advantage
Disadvantage
-
an attractive package in terms of the subsidy element.
capitalisation is not included, and, if we are to make a
"best" offer at the outset, Chinese expectations would be dulled as would our credibility (Castle Peak)
this option only gives real room to manoeuvre on the
length of credit since the definitions of UK and
local content are fairly precise.
locals were not covered on the Hong Kong projects and
we do not expect great interest in the subject by the
Chinese. To offer this might set an unwelcome precedent.
sensitive to drawdown fluctuations which could take the
subsidy element beyond 50%.
OPTION 4 UK goods plus capitalisation
Subsidy 46.54% over 12 years and 48.66% over 15 years.
Advantage
this offers the nearest equivalent to the Hong Kong
package. It contains a mixture of all the elements we
can offer for China and gives credibility to the negotiated contract "best" offer approach