TNAG-0950-FCO40-1169-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 31

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Outfie

026

HEV 13

Mr MUTTice

(ge.ed

1

CONFIDENTIAL LEG

18 N980

NO. 51

DISCUSSION BETWEEN THE SECRETARY OF STATE FOR TRADE AND THE GOVERNOR OF HONG KONG : 13 NOVEMBER 1980

(BESIDES MR NOTT AND HIS PRIVATE SECRETARY," MESSRS BENJAMIN AND DICK OF DOT AND CLIF OF THE FCO WERE PRESENT)

Guangdong Nuclear Project

1.

FA

Sir Murray MacLehose said that he thought that we should not take too tragically Vice-Premier Gu Mu's remark to HM Ambassador, Peking, that the whole project would go to the French. The Chinese would certainly still expect us to insist on a substantial quantity of British equipment being included in return for Hong Kong's purchase of electricity. He was sure that Sir Lawrence Kadoorie and Mr Gordon would play their hand carefully and helpfully with the Chinese. It was necessary to see what came out of the next meeting of the Executive Committee betwen Guangdong Electric Company and China Light and Power. He doubted very much whether the Chinese had taken a firm decision on the purchase of equipment.

Castle Peak 'B' Station

2.

Mr Nott said that he understood that while the Houston Exxon Board had recommended to the main Board in New York that they should participate in the project, the final result was not known although the DOT were working on the assumption that they would agree.

3.

It was agreed that the contract represented a very substantial opportunity for GEC with perhaps 80% of the total value of £1,000 million going to the UK.

4.

Sir M MacLehose recalled his discusion the previous week with DOI and ECGD officials when ECGD had appeared concerned over the economic risk of covering the project. He had in fact pointed out that the fundamental problem was a political one

a political one on which only Ministers could take a decision.

5.

Mr Nott said that ideally reinsurance for the cover outside Hong Kong was desirable but he realised that this was probably not possible. He understood the strength of the competition and the fact that competitors would be likely to offer better terms than us if they got the chance. He asked whether the Hong Kong Government would be prepared to provide any sort of guarantee. Sir M MacLehose said that this would be very difficult. The only guarantees they had so far given had been for certain equipment for the Mass Transit Railway. These guarantees were in fact no longer outstanding.

6.

Mr Nott said that he would have to persuade his Ministerial colleagues of the need to provide cover but he expected them to agree. He thought it would be sensible to get this agreement on ECGD cover fairly soon so that everybody knew where they stood.

17.

CONFIDENTIAL