TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 201

CONFIDENTIAL

4

into the project. (Both the Chinese and CLP appear to have thought that the

UK Government might be prepared to contemplate taking en equity holding. The

issue has not formally been put to Treasury Ministers but there is every indi- cation that it would not be looked on favourably).

In the context of the financial discussions we shall be seeking a clarification

of Chinese thinking on the nuclear island vendor. We need to know who the

muclear island vendor will be in order to put together a coherent financial

package for the whole project. More generally, however, it has been agreed

that in the course of this visit the delegation should not be lobbied from any

quarter on the advantages of either Westinghouse or Framatone,

Mr Rees

may be aware of the review conducted for the Prime Minister on this issue in

February. The Prime Minister concluded that we should keep open our options on

working either with Franatome or Westinghouse. Our official position is that

we await an indication of the Chinese preferences on the muclear island vendor.

For his own information, Hr Rees might like to note that GPC have invited the

delegation led by the National Nuclear Corporation and including representatives

of Westinghouse to visit Guangdong after Easter to explore the possibility of providing a Westinghouse nuclear island. This invitation has been accepted by

the National Nuclear Corporation but nothing specific has been said on timing

of such a mission, Before taking a view on this proposal we will wish to see

the outcome of the present visit and to make an approach to the State Department

in Washington to see whether the United States would be willing to contemplate PWR technology being transferred to China through the National Nuclear Corpora- tion acting as Westinghouse's licensee. CLP are strongly opposed to this visit which they see as encouraging the Chinese to contemplate competitive tendering for the project rather than taking a negotiated contract route on an Anglo/ French package.

Should the prospect of this visit be raised, Ir Rees might like to say that he understands that the National Nuclear Corporation were very pleased to receive

the invitation but further discussions need to take place, principally with the United States Government, before preparations could be made for such a visit,

MERAL

Department of Industry 19 March 1932