TNAG-1435-FCO40-1918-Hong-Kong-leading-personality-Sir-Yue-Kong-Pao--businessman-1986 — Page 2

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RECETTE IN REGISTRY

1 8 DEC 1986

DESK OFFICER

ALGISTRY

INDEX

PA

Action Taken

Secretary of State for Trade and Industry

CONFIDENTIAL

John Turner Esq

Private Secretary to the

Secretary of State for Employment

Department of Employment

Caxton House

Tothill Street

LONDON

SW1

Dear John,

89

DEPARTMENT OF TRADE AND INDUSTRY

1-19 VICTORIA STREET

LONDON SW1H 0ET5422

Telephone (Direct dialling) 01-215)

GTN 215)

(Switchboard) 01-215 7877

8 December 1986

Л

ཀྱི་

الله

ал

FED

ابھی

PS

AHKD

SIR Y K PAO

-

NINGBO STEELWORKS

A

CHINA

I understand that Sir Y K Pao is to meet Lord Young at 3.00 pm tomorrow. He met my Secretary of State and Mr Clark today and I attach some briefing on the Ningbo project which Lord Young may find useful.

Sir Y K Pao said that Davy McKee and their financial advisors (Hong Kong Bank) were proposing a scheme to finance the project that included loans and an element of aid supported concessional finance. It was not clear what the precise make up of the loans would be but Sir Y K did say, contrary to our earlier understanding, that the Chinese are prepared to consider loans in a basket of currencies (eg Sterling, D Marks and US Dollars), though the 7 per cent target interest rate will be calculated in US Dollars.

On the question of officially-supported finance, Sir Y K said that the Chinese authorities needed to know what proposals HMG could make. Mr Channon said that a 25 per cent grant on the proposed UK content of £l billion was beyond our resources and that aid funding part of the project can into OECD consensus problems repeating what was said to Sir Y K. When he met the Prime Minister and Mr Channon in October. Mr Channon left it that the matter would be considered further.

DW1CIG