CONFIDENTIAL
AMEX A
GUANGDONG NUCLEAR POWER STATION PROJECT
Background
1 In 1980 China Light and Power Company Limited (CLP) and the Guangdong
Electricity Company (GEC) of the People's Republic of China (PRC) conducted
a joint study on the feasibility of constructing and operating a nuclear
power station in Guangdong, part of the output of which would be sold to
Hong Kong. Ministers approved a continuing UK industrial and official
involvement in the study, and gave their support in general terms subse-
quently to the Chinese and to CLP. Ministers have also agreed that since
China is a Nuclear Weapons State we should not seek to insist upon the
application of safeguards, but that we should seek assurances that
equipment and materials will not be diverted to military use nor re-
exported without prior consultation and will receive adequate physical
protection.
2 The study was formally given to the Chinese in December 1980 and is
now under consideration in Peking. The study concluded that it is feasible
for the Guangdong Electricity Company and CLP jointly to construct and
operate a 2 X 900 MW PWR station some 30 miles north-east of Hong Kong.
The total cost of the project is estimated at £2,000m; the foreign exchange
costs would be met from electricity sales to Hong Kong. This project is
being weighed by the Chinese against the alternative possibility of developing
hydro-electricity in other areas of China.
3
There can be no certainty that the Chinese will proceed with the
project. The suspension of a number of capital construction projects
and announcement of a more rigorous policy of retrenchment suggests that
they will approach it with caution. We must nevertheless work on the
assumption that the project will go ahead. In that event it would offer
the prospect of substantial commercial benefits to UK industry. It would
also lead to further co-operation between