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the Mayor of Guangdong saying that political and economic cooperation with Britain could not be separated, and that while
we could have won 80% of the Canton Metro project, we would now
only win about 10%.
These are the most direct threats so far by the Chinese
authorities against our commercial interests.
4. BTC Hong Kong have said that there is no firm evidence of
British companies losing business in China, although some Hong Kong and Chinese companies may think twice before doing deals
with British firms. We know that Ambassador Ma is already
repeating the threatening noises he made to senior British businessmen earlier this year. Pressure on Ministers from this
quarter is likely to grow.
5.
We have considered with the DTI whether there is any action we can take. Representations by HMG to Ma or in Peking will only confirm to the Chinese Government that their tactics are
working. Action through the EC might be more effective.
Discrimination against British companies is not consistent with
the principle of non-discrimination in the EC/China Trade and
Cooperation Agreement. The attached telegram asks UKREP
Brussels to raise our concerns with the Commission and suggest
to them that they raise the matter with the Chinese Ambassador
to the EC in Brussels and through the Commission office in
Peking. This is unlikely to change Chinese policy.
But it may
lead them to adopt a more moderate public line (which would at
least reduce the risk of Hong Kong and Chinese companies avoiding doing business with British companies).
6.
The DTI are considering whether there is anything that we can do at a later stage in the context of preparing the
Commission's brief for the next Round of negotiations on China's
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Confidential