TNAG-0941-FCO40-1160-Visit-by-Lord-Carrington--Secretary-of-State-for-Foreign-and-1980 — Page 85

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We do not accept this argument, but if it is a factor in Chinese

thinking we must clearly take account of it.

Background

6.

Proposals for the construction of a nuclear power station in

Guangdong Province (which is energy-deficient) go back several years,

and the French were apparently close to a deal, possibly for two

reactors, before China's economic 'readjustment' slowed down orders

for foreign technology. Sir L Kadoorie's involvement also extends for

nearly a decade; he began canvassing the idea of a nuclear plant

across the border in China to supply electricity to Hong Kong in the

early 1970s.

7. The current discussions began in earnest in early 1979. Because

of shortage of foreign exchange, KEC proposed to finance the purchase

of hardware from the sale of 50% of the electricity to China Light and

Power (CLP) in Hong Kong. Discussions have since continued both with

P

CLP and NPC (Nuclear Power Company the joint public/private company

responsible for the UK nuclear industry).

water.

8. The Hong Kong Government is already reliant on China for food and

Cross-border electricity supplies would fit into the pattern

of increasing cooperation between Hong Kong and Guangdong. The Hong

Kong Government are therefore sympathetic to the concept of a joint

venture nuclear station in Guangdong supplying power to Hong Kong.

They would require satisfactory agreements to be reached on safety and

environmental issues, security of supply and tariff structure.

They

are however concerned that any hindrances put in the way by HMG (eg non-

proliferation questions) might result in the project straining rather

than improving political relations.

9.

At one stage there seemed a possibility that the Chinese would be

interested in a Magnox, but it became clear some months ago that

their first preference was a PWR, in which the UK still has no

CONFIDENTIAL

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