TNAG-1059-FCO40-1309-Guangdong-nuclear-power-station-project-1981 — Page 161

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COMMERCIAL IN CONFIDENCE

The Foreign Secretary continued that the project would be more acceptable from the Hong Kong point of view if there were a substantial British element in it.

HM Ambassador referred to a previous conversation he had had with Mr Zhao about the project and said that since we recognised a potential French interest, we were now thinking in terms of an Anglo/French collaborative project. Hong Kong also had a vital interest, as the project would only be viable through the sale of electricity to the territory and that it would be much easier for Hong Kong to cooperate if there were a substantial British content. The Prime Minister said that he appreciated this point and invited the British to keep in touch, particularly when the studies had been completed and the choice of equipment suppliers was being reviewed.

Mr McLaren also mentioned to Mr Stones the conflicting information we had received via the Belgium Parliamentary Delegation. Mr Yang Shangkun, a former Mayor of Canton and presently a vice Chairman of the National Peoples Congress, told the delegation that the decision had been taken to go ahead with the project He reiterated that this was the same station that had been mentioned by President Giscard. The French would supply the nuclear island, the UK the associated equipment and the Americans "equipment associated with the associated equipment". To further confuse the issue, he added that there would be contracts available for other countries as well and throughout gave the impression that all these points had been firmly decided.

Mr Stones said that although he made no claim to be an expert on China, he had visited there 20 or so times during the last 18 months and felt that he had established good relations with many Chinese. His information on the Foreign Secretary's visit was very similar; he understood that the Chinese Prime Minister had welcomed the idea of competitive bids from the UK. Mr Stones' own view was that the project was not at risk from any economic readjustment for a variety of reasons. Firstly, Guangdong Province's need for electricity was critical and he felt that they were some 20-30,000 MW short of what they needed if they were to bring about modernisation. That the project would be self- sufficient in foreign exchange was crucial and the support of CLP in running the station was considered a great asset by the Chinese. Mr Stones also understood that the feasibility report was well regarded.