TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 16

CONFIDENTIAL

Jn. Ada 30/A 2 Mercut

Foreign and Commonwealth Office

London SWIA 2AH

28 June 1977

1) 49gh M" Milton (1ika+0) Mr. Poppleton A

Sir Edward Youde, KCMG, MBE British Embassy

3) Reg

PEKING

HONG KONG, FOWER STATION PROJECT

Mr. Of

2] Mr. Hayward Date...

M

Are Max payphs kept on RED files or why it (1)?

20117

1. Your letter of 2 June was only received on 12 June. sorry an answer has been delayed.

I am

I

2. The Department of Industry are, as you say, taking the lead in dealing with the response to Sir Lawrence Kadoorie's approach. HKGC are looking after the Office's interest and are in close touch with the DOI. Both John Stewart and I have been keeping an eye on what may turn out to be a vory important venture both for British industry and in other ways.

The

3. I think you have seen most of the tulegrumu which have boon uxchanged between the DOI and the Governor and, more roountly, the BTC in Hong Kong but not, I have discovered, our tolegrum No.40 of 4 June to the BTC which contains the DOI's package offer. Thiu telegram, a copy of which I enclose, was despatched over the Silver Jubilee holiday and was not, by an oversight, ropeated to you. You will see from (viii) in this telegram that we have said we will provide the China Light and Power Company (CLP) with all the assistance we can to facilitate exports of coal from China to ilong Kong and the sale of UK mining equipment to China. (This is, uf course, the sume point that Sir Peter Curey put into FCO telegram No.366 of 13 May, on which you have commented in your letter.) DOI have continued to include the "Chinese dimension" in their package in order to show the CLP that they are prepared to explore every avenue in their efforts to come up with the kind of new and imaginative package that Kadoorie had said from the beginning that he wants. However, the DOI are under no illusions about the extent, if any, to which it may be possible to draw on Chinese supplies of coal for fuelling the new power station and to use this as a lever for promoting further sales of British mining equipment to China. We took on board straight away the point you made in your telegram No. 2 of 11 May to Hong Kong, that it is likely to be some time before the Chinese make up their minds about whether or not they will play ball with the CLP. In these circumstances, we are all agreed at this end that we should concentrate on the short-term and more tangible objective of trying to win the business with the CLP, leaving on one side the question of fuel supplies for the generating equipment. In other words,

In other words, we do not want to run the risk of missing! out with the CLP by chasing after the possibility of Chinese involvement, though we want to give the CLP the impression that we are sufficiently far-sighted to take it into account.

CONFIDENTIAL

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