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grid already in existence in Kwantung Frovince (107 miles of overhead lines). A system of this kind, similar to that adopted in Europe, would be inexpensive and of benefit to all.
3. Another area of cooperation was machinery. The sale of Chinese coal could generate foreign exchange for China or alternatively could be exchanged direct for goods and equipment. At this point Sir Lawrence emphasised that he was speaking not as a merchant but as a Hong Kong industrialist concerned with electric power generation. He wanted to provide cooperation in any way possible but his business interest was purely in purchasing coal.
4. Mr Sun replied that although he was not an expert he thought that Sir Lawrence's idea was very good. The proposal for the supply of Chinese coal to Hong Kong was made by the former ambassador Sir Edward Youde last year. He had asked whether China could supply coal to Hong Kong and whether this could be linked with the supply of British mining equipment to China. Chinese side had studied this idea carefully and found it con- structive and positive. Later during Li Chiang's visit to Britain he expressed China's agreement to the proposal.
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5. Sir Lawrence said that he had enlarged the original proposal because he believed that the expanison of the electric supply system in South China could foster further exchanges and coop- eration. In his view the exchange of goods and services was a better means of trade than buying and selling with cash. The supply of electricity involved no customs duties and no transport
costs. This idea had first occurred to him in 1937 but war had
intervened. Now the opportunity had presented itself again; moreover, voltages had increased, trains were faster and the range of electrical supply had grown. Additionally there were possibilities for mutual advantageous trading and financial terms which could be explored.
6. Mr Sun undertook to convey this idea to the departments
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