6
CONFIDENTIAL
Negotiating tactics will be affected by the timing of the opening of negotiations
W
the Chinese:-
Short Term
(to end 1981).
0
If the Chinese call a UK negotiating team forward during
this period a bald statement that the new Consensus rate
of 10% is effective could well cause them to lose
interest as they might expect we could have framed our
offer using the old rate.
Our negotiating tactic during this period will be to
offer the lower rate but to make it clear that it is
dependent on contracts being signed prior to 30 April
1982. Such an offer will demonstrate good faith on
our part and serve to match Chinese expectations of us.
If contracts were in fact to be signed prior to 30 April
we would of course have to abide by the lower interest
rate and a decision is therefore needed on whether to
adopt this stance. (Recommendation 2).
Long Term
(end 1981 - 30 April 1982)
If we are called to negotiate during this period the
chances of a firm contract being signed prior to 30
April recede considerably and also, by this time,
Chinese expectations of the old rate will be much
lessened. (Recommendation 3).
The interest rate offered is affected by the concessions that might be given on length
of credit (qv) and/or capitalisation of interest (qv) and in overall terms by the subsidy
element (qv).
CONFIDENTIAL
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