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Gearis explained frankly that as there was no hope of Westinghouse obtaining the whole contract, he thought it realistic to go for half a loaf, in the shape of a deal with NNC.
He was aware of Chinese hesitations about "hybrid arrangements, and said that what he and Westinghouse had in mind was in fact the straight production of Westinghouse technology through NNC as an intermediary. He acknowledged the contractual difficulties but thought that these could be overcome by skilful company lawyers.
We talked about some of the more obvious difficulties in the way of such a scheme. Searls claimed firstly that Stones was not quite as opposed as he had been to considering partnership with the Americans: he claims to have delected
à considerable shift in Stones' position about a fortnight ago. Secondly he thought that the Chinese would deal with their apparent commitment to the French by talking to them about a possible station in the North East. Finally, he said that Westinghouse would have every confidence in GEC's ability to provide the conventional turbines.
I was not able to get anything significant from him in the way of an assessment of the importance of Lu Ying. I contented myself with saying that while he had a co-ordinating role in Canton, he was less important than some of the other figures involved, and represented only one faction among several. While what he said was interesting the decisions would undoubtedly be taken in Peking.
This is the first approach the Americans have made to me here. I myself had a very general discussion with them about four months ago which did not evoke a response at the time. Searls previous experience with 30 Eastern will clearly be very useful if, as we hope, the pace of events speeds up in preparation for Mrs Thatcher's visit. I found Searls very much on the same wavelength as myself both in relation to the difficulties of the project and to the difficulties of dealing with the Chinese on it.
Knus
pp. G E Clark
ce:
PED, FCO
C Cruickshank, OTD4, DOT
D March, BTC HONG KONG
Chanceries: PARIS, WASHINGTON
CONFIDENTIAL
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