CONFIDENTIAL
59433 1
WE MUST BE PREPARED TO ENVISAGE CONTRACT SIGNATURE AT LEAST A FEW DAYS BEFORE 7 OCTOBER. WE THEREFORE SUGGEST THAT YOU MIGHT REFER
TO THE IMPORTANCE OF NOT SIGNING THE CONTRACT UNTIL ABOUT END OF
SEPTEMBER RATHER THAN AS NEAR AS POSSIBLE TO 7 OCTOBER. THIS
TIMESCALE IS CONSISTENT WITH THAT MENTIONED BY THE AMBASSADOR ON
29 AUGUST. 4.
YOU AND THE AMBASSADOR SHOULD BE AWARE THAT THERE ARE STILL TWO PROBLEMS OF PRINCIPLE OUTSTANDING IN THE LOAN AGREEMENT NEGOTIATIONS ON THE BRITISH SIDE, RELATING TO THE BANK OF CHINA'S
ACCEPTANCE OF INDEPENDENT ARBITRATION AND ITS RIGHT TO WITHOLD
DRAWINGS FROM THE LOAN IN CERTAIN CIRCUMTANCES. ECGD HAVE BEEN INVITED BACK TO SHENZHEN FOR NEGOTIATIONS FROM 7-10 SEPTEMBER, BUT WE DO NOT REGARD AN EARLY RESOLUTION OF THESE ISSUES AS LIKELY UNLESS THE CHINESE BACK DOWN. THE PROGRAMME COULD
THEREFORE STILL SLIP FOR REASONS UNCONNECTED WITH HONG KONG.
HOWE
OCMIAN 9433
GUANGDONG
[COPIES SENT TO NO 10 DOWNING STREET]
ADDITIONAL DISTRIBUTION
PS
GUANGDONG NUCLEAR
LIMITED
HKD
FED
NED
TRED
PUSD(MR CROWLEY)
WED
PS/MR RENTON PS/PUS
SIR W HARDING
MR DAUNT
MR WILSON MR SLATER
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CONFIDENTIAL