TNAG-0949-FCO40-1168-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 92

CONFIDENTIAL

233-4381

R A Brown Esq

MEP

Department of Industry

Ashdown llouse

123 Victoria Street LONDON SW1

Nck 166|1

RECEIVED IN REGISTRY NO. 51 2 5 JUL 1980

DESK OFFICER INDEX

No

PA

22 July 1980

REGISTRY Action Takes

༢

REFOR

GUANGDONG NUCLEAR POWER PROJECT

1.

Thank you for your letter of 16 July to Lick Clift cover- ing bir Lawrence Kadoorie's letter of 4 July and its enclosures. As I shall be attending the meeting in Manzie's office on 23 July, 1 am replying.

2.

You asked for comments in particular on enclosures 3 and 4. I am sure that Sir Lawrence is right in thinking that the project has considerable political significance. long hong's importance to China in the context of her modernisation pro- gramme, in particular as a source of foreign exchange, is such that she has a clear interest in the maintenance of economic stability in the territory. Chinese reassurances in recent months have followed the line of Deng Xiaoping's statement to the Governor in Peking in harch 1979 that investors should "put their hearts at ease". The implication is that China has no wish to see the present status of Hong Kong disturbed.

3. At this stage, however, we cannot go beyond this implied acquiescence in some form of continued capitalist structure for Hong Kong. There remains, nevertheless, the more immediate issue of maintaining business confidence in Hong Kong in the next few years, in particular among potential investors in the New Territories, who may soon begin to view with some con- cern the 1997 expiry date for the New Territories lease.

4. It is in this context, in particular, that all signs of stability in the area are to be welcomed as helping to maintain business confidence. Chinese interest in FRC/Hong Kong/UK cooperation and the development of particular projects which strengthen economic interdependence between Guangdong and Hong Kong should tend to contribute to our mutual vested interest in Hong Kong's stability. A major project such as a nuclear power station could well play an important role in reassuring investors about China's interest in maintaining Hong Kong's status.

CONFIDENTIAL

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