TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 21

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arrive at the 25% equity holding required by Chinese joint

venture law. In conversation with Bill Stones of CLP

recently, I gained the impression that potential investors

in the project would be forthcoming from the Hong Kong commu-

mity. On the other hand the Hong Kong Government will, I

think, be expected by the Chinese to have at least considered

the possibility of themselves taking equity in the project.

Although Li Peng himself did not propose this, it was clear

that the absence of a further commmitment by CLP leaves

the Chinese looking for alternative sources of equity.

A third aspect of the project which could probably be raised

at this stage is safety. We have periqdically seen signs

of great interest, not to mention concern, in Hong Kong about

the conditions under which the PWR would operate. Although

premature in the context of the whole project, assurances

from the Chinese at this stage that they recognise the

importance of safety : could avoid later alarms on both

sides of the border

I think it is clear that no final commitments can be under-

taken at the February meetings in either Peking or Hong Kong.

Our understanding is that the Chinese-decision making machinery

is still pondering the project's feasibility; the financial

structure of the project is under study by the client, bankers,

governments and suppliers alike, and many points remain to be

clarified; GEC's position, taking into account the political

importance of UK participation in the project, is a further

matter for clarification. However, the outcome of the

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