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3.
The main purpose of my visit was to sign a second concessional
financing arrangement for £300 million. This new facility has increased
flexibility as compared with the first loan in offering the use of either
mixed credit or soft loan, and in project identification/selection. There
is every prospect of allocating funds so that projects can be signed more
quickly than under the first loan. Our commitment is for three years, but I
made clear that if the funds were allocated more quickly we would review the
position.
4.
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I am,
There are few current ATP projects really under way in China, and it
was not practicable for me to see any on the ground. But I feel generally
confident about prospects for ATP in China, because I fully expect to be
able to rely on the Chinese to make sensible use of funds.
however,
concerned about two things. Ferstadthave become increasingly alarmed by
BERANDA UTI approach, co ATP-proposals they rush in to back any
request virtually regardless of whether it is necessary to clinch a
commercial deal or whether it is likely to open up further business
opportunities. They forget that the ATP budget is limited and that money
committed to one project will not be available to support another (maybe
better) project elsewhere. The DTI resolutely refuse to countenance
anything that smacks of "strategy"; but it is only common-sense to take a
view about which countries are likely to be the best long-term potential
markets. China comes at the top of my rist. Second, I am concerned by
the degree of dependency on ATP of some UK firms. They are often all too
ready to hint at or even offer more government support than we may wish to
provide or than may be necessary to win the contract. Since all
concessional financing is now governed by the same international rules, what
really determines whether or not a company gets a contract is whether it is
competitive itself, not whether government support is competitive.
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5. I was able to see something of our TC programmé. This seems to me to
be, in several respects, a model of its kind. It is in pursuit of the
principle so firmly eschewed by the DTI! - carefully focussed, on four key
areas : technical consultancies, training in the UK, ELT and academic links.
These are priorities for both the Chinese and ourselves. The bulk of this
programme is managed very capably by the British Council, thus allowing
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CONFIDENTIAL
/scarce staff resources