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signing contracts by then, nor have the Chinese proposed a clear
timetable for future negotiations. We are currently discussing with
the French how we can extract maximum leverage from the 15 January
deadline, and are due
and are due to see a delegation from Bank of China before Christmas. The brief suggests that if the Prime Minister is pressed
to extend further the 9 per cent rate, she should simply take note
of the request and make no commitment. It may be necessary to amend
this if the position changes as a result of our discussions with the
French or Bank of China.
CREDIT PREMIUM
In
5. The Chinese are aware that the French have recently upgraded China to their best risk category for credit premium purposes. November ECGD also decided to up-grade China from its category B to category A. The Chinese have previously expressed concern at the size of the (grade B) British premium compared with the French on
the Guangdong project. The brief recommends that the Prime Minister
inform Premier Zhao of our decision to regrade China, but this
should be coupled with a clear statement that there can be no
negotiation on premium level for Guangdong beyond this. This caveat is important because even with an A grade premium, the amount of our credit premium will be proportionately higher than that of the
French. We wish to resist Chinese pressure in negotiation to match French levels, which could be very costly.
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