TNAG-1162-FCO40-1442-Visit-by-Margaret-Thatcher--UK-Prime-Minister--to-Hong-Kong--1982 — Page 34

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almost reached agreement. Mrs Thatcher asked them both to push forward as soon as possible to achieve agreement. She understood the tax point had been referred to Peking and the Ambassador and his staff would help sort it out there.

5. The Prime Minister then asked about Guangdong's plans. Mr Liu said that Guangdong Province had a lot of light industry which provided particular areas for cooperation between Guangdong and the UK on the supply of equipment. There were also possibilities for the exploitation of non-ferrous and rare metals such as molybdenum, titanium, aluminium, tungsten, lead and tin. The Province was very rich in deposits of these along its coastal areas. Mrs Thatcher commented that Guangdong seemed very rich in natural resources if you remembered the offshore oil as well. Mr Liu said that his first priority was to develop light industry and secondly to exploit the non-ferrous metals referred to. The main difficulties Guangdong faced were in a shortage of energy resources and poor transportation. Guangdong had hardly any coal and although it was quite rich in offshore oil, it would take some time to exploit. The oil companies' bids were being examined by the Ministry of Petroleum: probably by early next year they would have derricks and drilling platforms on site. This was another area for possible cooperation with the UK. The Prime Minister welcomed this and said that it was important to have a good back-up - helicopters, supply ships and so on. Britain's North Sea experience could be very useful to Guangdong. BP, whom she had visited in Shanghai, would be very useful in this connexion. BP had developed the first big field in the North Sea and had acquired very valuable experience about what to do and not to do. She presumed that conditions were probably better in the South China Sea than in the North Sea, and asked about the incidence of typhoons, which would affect rig design.

6. The Prime Minister asked if there was a shortage of energy why Guangdong did not use solar energy. Nr Liu said that there was of course a lot of sun but much of the year was cloudy. There was more sunshine on Hainan Island than in any other part of the Province. The Prime Minister asked how electricity was generated now. Mr Liu said by hydropower and by conventional coal-powered stations. Of the total output of 2000 megawatts, 60% came from hydropower; unfortunately the water supply was erratic.

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7. The Frime Minister asked about the relationship between the Mayor's powers and those of the Frovince. Mayor Liang said that the city was governed under the guidance of the Frovince. industrial output and financial revenues amounted to 40% of the total provincial output and revenues so he must do a good job in Canton. He was able to keep about one-third of these revenues to carry out his own plans. The Frime Minister asked whether those