YOUNG'S
LORD YOUNGS MEETING WITH SIR Y K PAO
Line to Take
1
Note from my recent meetings in China that Chinese Ministers attach special
priority to Ningbo and have indicated that they wish HMG to support with
concessional finance.
2 As Sir Y K Pao was informed at meetings with Mrs Thatcher and SoS in
October the scale of proposed UK participation in Ningbo (£1 billion) precludes provision of aid in conventional form. Agreement has been reached
with Government of China on projects to be covered by the existing
£300 million soft loan facility. We wish to see substantial commitment of this
facility before we can consider what might lie beyond it.
3 The principal responsibility for finding an acceptable finance package
rests with the banks and the contracting parties. Every effort should be made
to achieve target finance terms (7% interest) by maximising use of export
credits and commercial facilities these should include use of other
currencies as well as US Dollars.
Understand Chinese Government proposed to
consider loans in a basket of currencies.
4 As Mr Channon said when he met Sir Y K Pao on 8th December, HMG is
considering whether it can assist the project but it is too early yet to say
what form Government assistance might take. We shall be in a better position
to take a view when we have a clearer idea of the financing terms agreed by
contracting parties. Account will also be taken of the attitude of German
Government (we have asked about this) and the feasibility fo the project.
999-80