TNAG-0932-FCO40-1151-Relations-between-Hong-Kong-and-China-1980 — Page 44

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CONFIDENTIAL

Electric Power:

32 Mr Benjamin noted that the Chinese expected to pay for their imports of power generation equipment via counter trade. He expected this to pose considerable problems.

Minerals:

i

33 However Li had indicated that the Chinese would be interested in a proposal from one company to develop both the tungsten mine in Lian Ping county and the hydro electric dams on Hainan, accepting payment for both in the product of the mine.

Mr Benjamin considered this option to be of especial interest to John Brown and was pursuing it with the company. Mr Benjamin noted that the Lian Ping deposits were fairly well established but surveys of other areas of possible interest were much sketchier. Li had agreed that morning that the Chinese would welcome expert advice from the UK on the potential of other sites and Mr Benjamin was approaching IGS.

Hainan:

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During his visit the Chinese had indicated to Mr Benhamin that they would like assistance to "confirm" their development plans for the island. He had not been able to ascertain whether this clarification was for the dam projects only or for much wider plans for the development of the whole island. However, he felt that it would be useful to send an ODA specialist to the area who was experienced in alvising developing countries on the order in which they should undertake projects. ODA had agreed to this in principle but the problem of finance had not been resolved.

Glass:

35 There was a large silicon deposit in Guangdong province which the Chinese were anxious to develop. They had done a lot of preparatory work on the possi- bilities for a glass factory making use of the deposit but had apparently been unable to interest the Japanese in the idea. This obviously led one to be cautious about the prospects but none the less Mr Benhamin felt that a visit from Pilkingtons would not go amiss.

Rail Developments:

35 These were totally under the control of Peking and during his visit

the provincial authorities had lost no opportunity to discomfit the central ones. It was impossible to say when any decisions would be made.

Guizhou Coalfield;

37 Mr Benjamin had discussed a proposal to develop this coal field in a neighbouring province and to use the project to finance the railway line that will be needed to connect it to the port of Canton. One problem was the Chinese request for Japanese levels of finance. Mr Benjamin nonetheless thought the opportunites were sufficiently interesting to warrant an approach by a very large company such as BP or Shell who would have the financial resources to support a development of this magnitude and to handle the very large quantities of coal that would be produced.

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There were no plans for Mr Benhamin to return to Guangdong but both sides had agreed that the dialogue he had initiated should continue via Mr Thomson in Hong Kong.