TNAG-2679-FCO40-3876-British-Trade-Commission--Hong-Kong--and-China-Trade-Unit-re-1993 — Page 29

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FM MODEV LONDON

TO ROUTINE B T C HONG KONG TELNO 7891

OF 301545Z SEP 93

INFO ROUTINE B E PEKING

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PA Fet

41.

115564

MDLIAN 0672

DTI FOR GALLAHER PEP

HKA 120/1

6 UC 1993

Bord

FROM MOSSELMANS V634:

FUZHOU WATER/SEWAGE PROJECTS:

DTI INTRA 110

1) TUR RAISES POSSIBILITY OF SUPPORT FOR FUZHOU WATER AND SEWAGE PROJECTS UNDER CFA 4.

2)

IN PRINCIPLE SUCH PROJECTS COULD BE SUITABLE CANDIDATES FOR CFA 4.

3) HOWEVER MINISTERS HAVE YET TO TAKE FINAL DECISIONS ON CFA 4 PENDING PROGRESS ON THE ONGOING HONG KONG CONSTITUTIONAL TALKS. THEREFORE OUR INCLINATION AT THIS STAGE WOULD BE TO ADOPT A CAUTIOUS LINE ABOUT THE PROSPECTS OF CONCESSIONAL FINANCE IN ANY DISCUSSIONS WITH THE CHINESE ON THESE PROJECTS WHILST DECISIONS ON CFA 4 REMAIN TO BE TAKEN, SO AS NOT TO RAISE UNDUE EXPECTATIONS.

4) IT MAY BE INADVISABLE TO EXPLICITLY SUGGEST LINKS BETWEEN CAPITAL FOR THE ENVIRONMENTAL PROJECTS AND THE AIRPORT. THIS MIGHT LEAD TO DIFFICULTIES RELATING TO THE OF CD RULES.

5) WE MAY RUN UP AGAINST FINANCIAL CONSTRAINTS. WE ENVISAGE CFA 4 WOULD COVER PDS STLG 50-80 MILLION WORTH OF BUSINESS, BUT THE LION'S SHARE OF THIS COULD GO TO THE NANSING AIRPORT PROPOSAL.

6) IDEALLY WE WOULD PREFER PROJECTS WITHIN ODA'S GEOGRAPHICAL FOCUS OF PEKING, TAINJIN, SHANGHAI, JIANGSU, GUANGZHOU: BUT WE DO NOT REGARD THIS FOCUS AS EXCLUSIVE AND WILL CONSIDER GOOD PROJECTS IN OTHER AREAS.

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