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THE FACT THAT NEW LARGE-SCALE POWER STATIONS WILL USE IMPORTED COAL, THE ECONOMICS NOW BEING RIGHT.
9. RECENT STATEMENTS BY CHINESE LEADERS THAT HONG KONG RISKS BEING OVERTAKEN BY EVENTS SHOULD BE TAKEN SERIOUSLY. THE HONG KONG BUSINESS COMMUNITY WILL DIRECT THEIR PEOPLE AND CARGO WHERE COSTS ARE LOWEST. ALREADY EMPLOYING 3-4 MILLION PEOPLE IN THE DELTA, THEY FIND THE POLITICAL BOUNDARIES ARE NOT THE MAIN CONSTRAINT TO TRADE. SPEED OF HANDLING AND COST WILL DETERMINE
THE FLOWS.
UK INVESTMENTS
10. ALL REPORTS WE RECEIVE FROM THE MAJOR BRITISH INVESTORS (E.G. SHELL, ICI, BA) ARE THAT THEY ARE BEING RECEIVED WARMLY AND AT SENIOR LEVEL. ONE TOP EXECUTIVE TOLD ME YESTERDAY THE CHINESE WERE ''BEGGING' HIS COMPANY TO DO MORE. THE PACE OF CHINESE DEVELOPMENT IS LEADING TO BOTTLENECKS IN KEY AREAS OF ENERGY, CHEMICALS, COMMUNICATIONS AND TRANSPORT AND ONLY THE BIG MULTINATIONALS CAN DELIVER IN THE TIMESCALE THE CHINESE NEED. THERE IS NO EVIDENCE THAT HONG KONG POLITICS ARE HOLDING THE CHINESE BACK IN THESE NEGOTIATIONS: BUT THERE IS CONCERN AT BOARD LEVEL IN THE UK THAT THE POLITICS WILL NOT BE CONTROLLED AND THAT THERE MIGHT BE A DOWNWARD SPIRAL OF ACCUSATION AND RETALIATION. BUT THE LOCAL REGIONAL MANAGERS ARE CONFIDENT AND TRUST THE GOVERNOR'S ABILITY TO STEER THE BEST COURSE IN DIFFICULT CIRCUMSTANCES.
COP TRADE
11. MEANWHILE, DAY TO DAY BUSINESS ENQUIRIES AND VISITORS ARE HOLDING UP, THOUGH THERE IS NO DOUBT THE RECESSION AT HOME IS SEVERELY IMPEDING THE ABILITY OF MANY FIRMS TO SEIZE THE OPPORTUNITIES. THE DAMAGING EFFECT OF MEDIA REPORTS ON THE ROW WITH CHINA IS ALSO A CONSTANT IMPEDIMENT. THE SPEECHES OF DTI MINISTER AND OFFICIALS CAN ONLY HELP, AS WILL THE 11 MARCH CONFERENCE IN LONDON (WHICH GORDON WU HAS AGREED TO ATTEND). WE ARE RUNNING A SERIES OF SMALL SEMINARS HERE ON MR. NEEDHAM'S TRADE STRATEGY AND THEY SEEM TO BE EFFECTIVE.
12. BLACK POINT NEGOTIATIONS ARE GOING WELL, WITH OUTSTANDING SUPPORT FROM ECGD. SIGNATURE OF LOAN DOCUMENTS SHOULD BE ON 12/3.
13. FCO PLEASE PASS TO PS/MR GOODLAD, MR HUM, ECONOMISTS, HKD AND FED. DTI FOR PS/MINISTER FOR TRADE, PEP, OT2 AND OT2/20.
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