Mr White
CONFIDENTIAL COVERING SECRET
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SC166/16
GUANGDONG
1. I called this morning on M Joutard (Sous-Directeur in the DREE) to ask him about credit terms for the Guangdong project.
2.
M Joutard said that as far as the French Government was concerned they would obviously prefer a wholly French project. If however it was apparent that only a joint project would be successful in view of the Hong Kong factor they would be very willing to go along with a Franco/British bid. The present position was that the Chinese Government had still not taken a decision whether to go ahead with the project. They appeared to be waiting to see whether it should go in the next five- year plan. Some time ago the French Government had invited the Chinese Government to send a team to discuss the financial aspects. The Chinese had still not sent a team and were hiding behind the procedural device of asking the French Government to say something in advance about the credit terms which it would offer.
3. M Joutard said that when President Giscard had made his general statement about giving the Chinese particularly favourable interest rates there had been no discussion of the details.
This was still the present position. Even within the French Government no decision had been taken. The Chinese were aware of the terms already granted to the South Koreans and to the Taiwanese, ie 85% over 15 years from commissioning with, in the case of South Korea, payment of local costs. The Chinese were likely to want something better although the terms offered to the South Koreans and Taiwanese were in fact exceptionally favourable. If the Chinese insisted on further concessions, M Joutard speculated, this could be in the form of payment of a larger proportion of the local cost or adjustment of progress payments. But, M Joutard added, he was only thinking aloud. The French Government had no intention of spelling out its credit terms before it had a much clearer idea of the size and timing of the project. The French Government had suggested that the Chinese team should go to Paris to discuss the whole project, including credit terms, but the Chinese had rejected this, saying that when they came they would want to talk about financing only.
4. I pointed out to M Joutard that we would expect the French to play scrupulously fair on the two competing bids. It would be advantageous to both sides to avoid any kind of credit war, especially as the Chinese could be relied upon to keep each partner informed (in other words the French could not expect to
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