CONFIDENTIAL
145267
MDADAN 0334
4.
British press reports of an official Chinese "hit list" of British companies cannot be corroborated. Allegations of delays in the award of major projects are also difficult to uphold since these habitually involve protracted negotiations in which the particular influence of the various local and national bodies is far from clear. Although possible
Although possible fall-out from Hong Kong is regularly raised by business visitors, none to date has provided any clear evidence of discrimination. Occasional comments linking Loss of contracts to Hong Kong have been made to companies by junior officials, but this might just have been a handy excuse.
5.
Thorn EMI are pursuing a billion-pound deal for an airborne early warning system. They have told MOD that the Chinees have indicated that "political factors" might militate against them. We are trying to find out more.
6. We are aware of one other contract where the Hong Kong issue may possibly be holding up a decision. GEC Marconi are pursuing a PDS 26 million contract for air traffic control radars funded by the Japanese OECF. Their main competitor is Alenia of Italy. A decision was due to have been made last year. In March this year Vice-Premier Zhu Rongji told Bank of England (then Deputy) Governor Eddie George that GEC Marconi had won the contract. However since then endusers CAAC have beer seeking to distance themselves from his statement. At a recent meeting with a member of Commercial Section, CAAC made veiled references to "other factors", but this was the first suggestion that Hong Kong might be an influence. is not known when a decision will be made.
It
7. On the other hand British companies are still winning major contracts. Our telno 151 Intra reported the award of a USD26.5 million contract for a Direct Reduction of Iron Plant to Davy International against German competition and immediately after Kohl's visit. Our exports to China in the first nine months of 1993 were almost 90 per cent up on the same period in 1992.
CONCLUSIONS
8. The Chinese are nothing if not pragmatic (as illustrated by their treatment of Airbus as a German venture while France was out of favour). It has
It has always been our expectation that if they did wish to demonstrate displeasure over Hong Kong they would single out a small number of major projects of interest to the UK rather than acting against our commercial interests across
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