TNAG-0767-FCO40-971-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 16

• DEPARTMENT OF TRADE

1 VICTORIA STREET LONDON SW1H OET

Telephone 01-215 7877

RESTRICTED

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B G Cartledge Esq 10 Downing Street

From the Secretary of State

FED

dafuffy

28 June 1978

Mr Murray HKGD

Dear Mayan

SIR LAWRENCE KADOORIE

John Mills sent me a copy of his letter of 23 June to you attaching a draft reply for the Prime Minister to send to Sir Lawrence Kadoorie.

I suggest that the draft should be amended by deleting "and other raw materials" in the first sentence of the third paragraph and substitu- ting "in connection with the Hong Kong power station project" in order to avoid the possibility of misunderstanding about the scope of the proposals which the Department of Industry have been exploring.

This specific proposal is essentially for the purchase of UK machinery by China with the earnings from her sales of coal for the power station which Sir Lawrence is building in Hong Kong. It could well cause con- fusion to give Sir Lawrence the impression that they also cover possible counter-trading arrangements with China outside the Hong Kong deal.

The broader question of counter-trading with China is a complex one which has to be seen in the context of our whole developing trade relationship with China. This Department is considering it in prepara- tion for the Secretary of State for Trade's proposed visit to China, about which I am writing to you separately.

I am copying this letter to Kieran Prendergast (Foreign & Commonwealth Office), John Mills (Department of Industry), HM Ambassador in Peking, and Derek March (British Trade Commission, Hong Kong).

Your

اشت تمام

M M BAKER

Private Secretary

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Morya Naker.