TNAG-0948-FCO40-1167-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 89

CONFIDENTIAL

GUANGDONG

NUCLEAR POWER STATION PROJECT

Although the People's Republic of China has had an impressive rate of growth in the generation of electri- city since 1949, supply remains inadequate for the needs of the country's current modernisation programmes. This shortfall calls for the construction of additional large power stations, the technology for some of which will have to be imported. The Chinese province of Guangdong, adjacent to Hong Kong, has for some time now been con- sidering the purchase of a nuclear power station.

The foreign exchange to help purchase the hardware would come from the sale of half of the electricity produced to CLP in Hong Kong.

Hong Kong's role is therefore crucial, and the colony needs to be reassured on safety and environmental aspects as well as the commercial terms and security of supply. There are also wider political reasons for encouraging and participating in the closer integrated development of Guangdong and Hong Kong. The UK's close links with Hong Kong, and in particular with its electri- city utility China Light and Power (CLP) also suggests that UK industry should be given the opportunity to play a major role as hardware suppliers for the station. Export business worth some £380m could be in prospect even though a foreign partner would be required who could supply the nuclear stean supply system the heart of the Pressurised Water Reactor (PWR).

-

Nuclear Proliferation considerations are a complication as the Chinese have made it clear that they will not accept inspection of their nuclear installations. This could pose problems for any American supplier of the NSSS. However it is not expected to be a major stumbling block for the UK as: -

there is no requirement under the Non-Proliferation Treaty for Nuclear Weapons States such as China to accept inspection;

(a)

(b) the French have already indicated that they would

not seek inspection other than assurance about non-diversion to military uses;

(c)

such issues are primarily the concern of the country. supplying the nuclear 'island',

The Guangdong Electric Company (KEC) has set up joint committees wehCLP to investigate all aspects of the possible acquisition of a nuclear station, including site selection, technical, safety and commercial aspects. As well as the UK and HK Governments, both KEC and CLP recognise that CLP does not have the necessary nuclear expertise and that it is therefore essential to provide a credible UK support team.