TNAG-0768-FCO40-972-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 196

KI

GR 450

IMIATE

CYPHER CAT A

FM FCO 21192OZ

CONFIDENTIAL

DESKBY 2203OOZ

CONFIDENTIAL

TO IMMEDIATE PEKING TELNO 390 OF 21 JULY

INFO IMMEDIATE HONG KONG

HONG KONG COAL DEAL

PA

HKK164/1

RELAT

24 JUL 1978

PA

NG.

R

186

No

See 188

89

MIFT CONTAINS THE DRAFT TEXTS OF A LETTER FROM LIPPITT TO

KADOORIE 11 A MEMORANDUM FROM HMG ON THE HONG KONG COAL DEAL TO BE PASSED TO THE CHINESE: AND 111 A DRAFT LETTER FOR KADOORIE TO SEND TO SUN SUO-CHANG, PREPARED BY HIS LONDON REPRESENTATIVE, MR DEIRE MATHEWS OF SCHRODERS.

2. YOU WILL APPRECIATE THAT, IN DRAFTING DOCUMENTS I AND PARTICULARLY VI WE HAVE HAD TO CONDUCT A BALANCING ACT BETWEEN SEVERAL IMPORTANT

POLICY CONSIDERATION.

3. ON THE ONE HAND, AS REGARDS CUR EXPORTS TO CHINA, WE WISH HMG TO GIVE A FAIR WIND TO THE SPECIFIC COAL FOR COAL MACHINERY, ELECTRICAL TRANSMISSION OR POWER-STATION DEAL, PROVIDED THAT THIS DOES NOT DISRUPT OR REPLACE CURRENT OR PROSPECTIVE DEALS ON OTHER ACCEPTABLE AND IN SOME CASES PREFERABLE TERMS OF PAYMENT, AND PROVIDED THAT IT IS WITHOUT HMG ASSUMING COMMERCIAL RESPONSIBILITY. AS REGARDS OUR EXPORTS TO HONG KONG WE ARE ALSO CONCERNED TO REMAIN

ON GOOD TERMS WITH KADOORIE.

4. BUT FROM THE ASPECT OF OUR GENERAL COMMERCIAL POLICY TOWARDS CHINA, THERE MUST BE NO IMPLICATION, PARTICULARLY TO THE CHINESE, THAT HMG FAVOURS COUNTER-TRADE AS A GENERAL POLICY, NOR THAT THE KADOORIE INTERESTS ARE OUR CHOSEN INSTRUMENT FOR EXPORTING TO CHINA EITHER GENERALLY OR THROUGH COUNTER-TRADE, NOR THAT BUSINESS ARISING OUT OF THE ALTERNATIVE STUDIES MENTIONED IN THE MEMORANDUM, WHICH MIGHT MATURE TO AN EXTENT GOING BEYOND THE CHINESE COAL PURCHASES AND THEREFORE THE POTENTIAL KADOORIE DEAL, SHOULD NECESSARILY BE

BY COUNTER PURCHASE.

CONFIDENTIAL

15.