TNAG-1059-FCO40-1309-Guangdong-nuclear-power-station-project-1981 — Page 205

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SUBJECT: MR REEVE'S VISIT TO WASHINGTON, APRIL-MAY 1981

GUANGDONG NUCLEAR PROJECT

POINTS TO MAKE (IF RAISED)

1. No definite indication that PRC will proceed with a

nuclear power station, at least in the short term. But

special nature of Guangdong project (foreign exchange cost

met by sale of electricity to Hong Kong) may isolate it

from effects of economic retrenchment and makes it look

the most likely prospect. Does the US have any information

on this?

2. Because we do not manufacture PWRS (the favoured reactor type) we cannot supply the whole station. But

Hong Kong connection, and our involvement in the

feasibility study, places us in a strong position to take

a major share of the project. (The feasibility study recommends preference for UK and Chinese equipment). The

French also appear to have some edge from commitment to

Giscard that France would supply first power reactor to

China.

3.

:

Non-proliferation conditions seem likely to be

crucial. The Chinese have said that they will not accept

international inspection, The French and UK view is that

since China is a nuclear weapon state we should not seek

to insist on these (although we should want assurances

on non-diversion to military use, physical protection,

and re-exports). What would be the likely attitude

of the US Administration to the supply of equipment and

materials from the US?

4. In view of the French position on safeguards, and its apparent political advantage with the PRC, we see the

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