TNAG-2921-FCO40-4196-Visits-and-proposed-visits-by-Alastair-Goodlad--Minister-of--1993 — Page 37

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PEKING TELS 1609 AND 1614. HONG KONG TEL 1897: CHINESE THREATS TO BRITISH COMMERCIAL INTERESTS

1. The business community in Hong Kong continues to absorb statements from China which suggest discrimination against British business. In addition to the statements reported in TURS the Governor of Guangdong, Zhu Senlin, is reported to have said that political and economic co-operation with Britain could not be separated.

2. British businessmen have told us of one or two cases where Chinese officials at a Lower Level have shown reserve (eg business visits to Britain postponed on the grounds that the timing was quote inappropriate unquote), or have delayed routine matters. Whether this sort of behaviour results from policy decisions or simply from a wish to avoid doing anything politically incorrect, is difficult to judge from here.

3. Firm evidence of business lost is not (not) yet reaching us. Most of the big British firms here, including GEC, believe that the decision on the rolling stock for the Canton Metro was more to reward the Germans than to punish Britain. Outside the rolling stock, British firms have been issued with Letters of intent for two smallish contracts for the Metro (the catenary and the ventilation). The fate of the other bigger contracts for the Metro

signalling and the tunnels themselves - is yet to be decided, and Westinghouse and Balfour Beatty continue to pursue them.

4. However, we have almost certainly reached a stage where for the time being many Hong Kong Chinese entrepreneurs will think twice before doing deals for China with British firms unless there is an overriding reason. Li Ka-shing suggested to me recently that the Trade Commission would probably go through a difficult period. His son Victor added that British trade with China was bound to be hit,

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