HOLNAN 1860 PeaPad Zube
RESTRICTED
RR INDUS
FM PEKIN TO INDUS
27022OZ SEP
GRS 420
Coff
!
RESTRICTED
FM PEKING
TO ROUTINE DTH
TELNO INDUS 190
OF 27022OZ SEPTEMBER 86
Hril 160/1
RECEIVED I
3 OCT 1986
FOR ALTY, SEE3:
FROM DAVIES.
PA
636B
нк HKCIJE
PA
YOUR TELNO'S INDUS 204 AND 2054
GEC LOCAL MANUFACTURE.
GUANGDONG NUCLEAR PROJECT:
1. ACCOMPANIED ABRAHAMS OF GEC TO A MEETING WITH CMEC AND MME: ON
26 SEPTEMBER. ABRAHAMS WENT OVER THE HISTORY. HE EXPLAINED THAT GEC HAD IN GOOD FAITH NEGOTIATED FOR A PROPORTION OF LOCAL MANUFAC- TURE BUT THAT THE CUSTOMER, THE JVC, HAD ULTIMATELY MADE CLEAR THAT THEY DID NOT WANT THIS. ONE REASON WAS THE EFFECT THAT LOCAL MANUFACTURE WOULD HAVE ON THE TOTAL LOAN VALUE. THE SPOKE ON
THE LINES OF 2(A) AND (3) OF YOUR INDUS 205.
2. CHEN QINPING OF CMEC THEN SPOKE RATHER FORCEFULLY. CMEC WERE SHOCKED THAT GEC HAD SUDDENLY TERMINATED DISCUSSION ON LOCAL MANUFACTURE. THE PROJECT HAD BEEN DISCUSSED BETWEEN GEC AND CHINESE PARTIES SINCE APRIL 1984. GEC HAD SENT TEAMS THREE TIMES TO CHINA.
THE CHINESE HAD ALLOCATED 50 PEOPLE FROM 14 UNITS INCLUDING ? FACTORIES OVER 2 AND A HALF YEARS TO PURSUE NEGOTIATIONS. THE PROBLEM OF THE LOAN FUNDS HAD NEVER BEEN MENTIONED BY GEC, EVEN AFTER THE SIGNATURE OF THE LOAN AGREEMENT DURING A MEETING IN APRIL 1986 IN SHANGHAI. THE JVC HAD SUBSEQUENTLY INFORMED BOTH GEC AND
THE CMEC THAT NEGOTIATIONS ON LOCAL MANUFACTURE COULD CONTINUE. BCC HAD TOLD CMEC THAT THE 15% LOCAL COST COVER COULD NOT COVER LOCAL MANUFACTURE OF EQUIPMENT AND THAT LOCAL MANUFACTURE SHOULD BE COVERED BY THE 85% FOR EQUIPMENT. CMEC UNDERSTOOD THAT IF GEC BOUGHTIN FROM ITALY OR FRG THIS COULD BE COVERED BY THE EQUIPMENT