TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 162

CODE 18 - 77

Fco.ro.u

Vol.no.436

CONFIDENTIAD

Reference.

RF

RE

23 MAI....

MR LIPPITT

(Go);

4KK 1641

164/1

HONG KONG POWER STATION PROJECT

CIP circulation list

(57)

Following the reply of 16 May from No 10 Downing Street to PS/Mr Williams' letter of 13 May, HM Ambassador in Tokyo is now being given guidance on the appropriate response if the Japanese pursue further the issue of the China Light and Power contract. He will take no initiative on this matter but, if it is raised, he will say only that HMG attaches the greatest importance to British companies winning orders for new equipment. He will not ask in terms that the Japanese Government should intervene with their own industry. The telegram will be sent today.

2 We need to consider how we should reply to the Governor of Hong Kong's telegram 494 of 16 May (attached to Mr Stewart's letter to me). I have discussed this with the FCO, who have in turn spoken to Mr Roberts (CRE). We are agreed that the Governor should be told that he should not raise the matter with Sir Lawrence Kadoorie. If it is raised with him, he should broadly follow the line indicated in the advice given to HM Ambassador in Tokyo (which he will have seen). Sir Lawrence would therefore be left with a strong indication of the personal interest of the Prime Minister in the contract, but with no further information. If you are content, I will submit a draft telegram to PS/Secretary.

3 The question arises whether we should use the opportunity of. this telegram to the Governor to bring him up to date with developments vis-a-vis GEC. Although little progress was made at your meeting last Friday, I consider we should not at this stage suggest to the Governor that we may well encounter serious difficulties.

4 I have discussed Para 2 of Mr Stewart's attached letter of 16 May with him. We are agreed that there can be no question of a delay in British interests putting a "package" to CLP until the coal from China/export of mining machinery possibilities had been clarified. On the other hand, we need to ensure that the package could incorporate these deals if they do in fact materialise.

Asmawmach

A J MACDONALD

IC2

Room 610 V/S 215-5015

17 May 1977