CONFIDENTIAL
The commitment to the French option still seems strong among senior Ministers in Peking.
4. The Americans on the other hand are going through a very
difficult patch with the Chinese as a result of differences
over arms sales to Taiwan. The Taiwan issue is very emotive for
the Chinese. A downgrading of relations still cannot be ruled
out. This would obviously affect the acceptability of a US
option to the Chinese. Nevertheless, since the timescale
of the project is both uncertain and in any case lengthy, it
is too early to say how far current Sino-US difficulties might
affect the Chinese decision.
-
5. The overriding consideration may indeed turn out to be the
well-known Chinese propensity for seeking the cheapest possible
option and therefore their encouragement to the various interests
US, French and British to put in competing bids. They are very
worried about the cost of the commitment the nuclear project
would represent. They are also by nature and by ideological
conviction suspicious of exclusive offers by foreign capitalist
enterprises. There are those who profess to believe that China
has in the past been the victim of unscrupulous overseas business
interests. The implications for us and for GEC are that although
a negotiated contract may appear to offer the tidiest and possibly.
the most economic route for both the bidders and for the customer
the Chinese may well reject such a proposal as limiting their
freedom of manoeuvre... If that is so, we are clearly in no position
to prevent their seeking competitive bids. The only effect of our closing one of our present options might be to push the Chinese
into exploring the possibility of cooperation with other partners in an arrangement in which we would play no part. This strengthens me in the belief that for the present the line proposed by Patrick Jenkin is the right one. In any event, if the French do not wish to go firm, we can hardly do so.
CONFIDENTIAL
/6.
;