SECRET
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Physical interference and threats
9.
There are reports that the Chinese used threats to try to induce a Chinese contractor (China Harbour and Engineering) to withdraw from the airport platform contract. They backed down when the contractor showed that he stood to lose a $20 million bond. It is possible that they could try to use commercial threats to pressure other Chinese, local or overseas contractors not to take up Government contracts. Given the general paucity of works contracts in the market, however, the risk of this tactic succeeding is not great.
10.
Certain major contracts (e.g. the LFC),
the LFC), depend on the use of facilities in Shenzhen for assembly and staging of components. Some land formation contracts also rely on sand from China. The Chinese could try to interfere in these. It will be for WB to devise contingency plans to mitigate the effect of such interference, which could slow down projects.
(INTERFERE)
Finance Branch
4 February 1993
SECRET
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