CONFIDENTIAL
It would be a significant boost to confidence in the
airport project, and to British companies' chances of being
successful, if we were able to indicate now that, in
principle, ECGD cover will be available for the series of
contracts under the overall airport. The Foreign Secretary
appreciates that there are concerns about ECGD's high exposure
to Hong Kong (and China) and that the discipline of PMS has
set new standards of assessment of risk. But Hong Kong has
been one of the most successful markets for ECGD over the
years. And if agreement with China over PADS can be reached,
the probability of any default will surely be minimal.
The Foreign Secretary considers that this is a
significant step we could take to show our confidence in Hong
Kong and in the airport project and recommends that it should
be explored further, once we are clear about the outcome of
our talks with the Chinese Government about the airport. Any
such step should be without detriment to other major projects
in Hong Kong such as the power station expansion programme of
China Light and Power where British companies are also well
placed to win substantial work.
I am copying this letter to Jeremy Haywood (HM Treasury),
Sonia Phippard (Cabinet Office).
S L Gass
CONFIDENTIAL