TNAG-0565-FCO40-660-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 107

Mr Hanna

Reference....................................................

CONFIDENTIAL

HONG KONG MASS TRANSIT SCHEME

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Please see the copy which Mr Lowton (ECGD) has sent us of his letter of September to Miss Kelly in the Treasury and the BTC Hong Kong's telegram No. CREDA of 2 October.

2. There is an FCO interest, (or at least a HKIOD and, I believe, an FED interest) in ECGD's being in a position to offer the best terms possible to British firms bidding for contracts for the Mass Transit scheme. As you know, it helps with the Chinese if Hong Kong is seen to be demonstrably a British Colony in which British economic interests predominate (see paragraph 7 of the brief on UK/Hong Kong Trade for Sir Michael Palliser's visit to Hong Kong on 7-9 October). The same point is made more explicitly in the relevant section of the Secretary of State for Trade's minute on his recent visit to Hong Kong quoted in paragraph 8 of Mr Lowton's letter, namely, "the Chinese certainly do not want to see Hong Kong become an economic satellite of Japan".

3. Subject to your advice, it seems to me that we should get in touch with TRED with a view to our letting the DOT/ ECGD know urgently that they would have our support if they were to continue to argue the case for ECGV's being authorised to grant more favourable credit terms. The particular issues in question seem to be the set scale terms for increasing values of export contents and the financing of local costs. I do not think that we need to become involved in the finer points of these issues but should make the political point in paragraph 2 above.

3 October 1975

1.G. Mullu

D F MILTON

Hong Kong & Indian Ocean Department

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CONFIDENTIAL

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