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We would know more after the next Executive Committee meeting between China Light and Power (CLP) and Guangdong Electricity Company (KEC). If the Chinese side did not take the Gu Mu line then, things would look hopeful. If they did, he would expect Sir Lawrence Kadoorie to take the line that CLP must consider carefully the type of equipment to be used, taking safety, effi- ciency and continuity of supply into account. He hoped he would also say that CLP were used to and favoured British equipment. He had discussed with Lord Nelson of GEC who agreed.
Mr Blaker suggested that the Chinese were trying to stake out a position for negotiation.
Sir M MacLehose agreed. The financial terms offered by the French could be crucial. We had to consider carefully how to play the Hong Kong card. A good deal could be made of it but if a French- built power station offered safe, continuous and cheap electricity it would be difficult to justify refusing to buy it. He repeated however that he was reasonably hopeful. It was up to GEC to get their price right. The French at least did not seem to regard themselves as necessarily operating on their own. Lord Nelson had told him that Framatone had firmly undertaken with GEC to consider a joint operation.
(e) Civil Aviation
Route
UK/PRC Air Route and Hong Kong/Shanghai
Sir M MacLehose said that, despite the problem over the designation of Hong Kong Airways (HKA) on the Hong Kong/Shanghai route, it was helpful that Hong Kong was already firmly established as the tourist gateway to China. It was unfortunate that in a sense HKA was a fiddle. This gave the Chinese a legitimate excuse for holding things up. But their real reason was that they wanted new rights via Hong Kong, either to the UK (which they must realise was out of the question) or to the United States. The latter looked a big demand although in practice it would be less of a threat because no-one would wish to fly CAAC. Cathay Pacific were not worried. He thought caution was necessary over setting up a separate company to fly the Hong Kong/Shanghai route. Talks with CAAC would start in December.
Mr Blaker asked what would happen if there were no genuine second airline to fly the route and the Chinese refused to accept HKA. Sir M MacLehose thought there might be ways to make HKA more acceptable. He wondered if something might be made of the probable British Airways intention to sell their 15% share in Cathay Pacific. If Hong Kong Chinese interests who were in close touch with Peking acquired an interest, they might influence the Chinese. But the basic problem remained that the Chinese wanted fresh rights for themselves.
(f) Green Paper on District Administration in Hong Kong
Sir M MacLehose said that he needed more time to consider the details of the White Paper. This would therefore not be issued until
January or February.
He hoped this would not cause problems for
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