TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 30

BACKGROUND

CONFIDENTIAL

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3.

During the Prime Minister's visit to China in September,

Premier Zhao Ziyang indicated that, all things being equal, the

Chinese preference was for a French nuclear island with the UK

supplying the conventional plant. It seems likely that this

view resulted from the State Department's refusal to permit US manufacturers of nuclear plant and their licensees to export to China: no change in the State Department's position is expected

before next year at the earliest. Premier Zhao reiterated his

statement to Mrs Thatcher to Lord Nelson of GEC at the beginning

of November, though the Minister of Water Conservancy and

Electric Power told Lord Nelson that the Chinese wanted to

encourage competition between all potential suppliers.

4.

Both at official level and, through the Anglo/French

summit, at Ministerial level the French position has been explored. At these meetings the UK pressed the advantages to both parties of a Frama tome/GEC package. The French stated that

they were unaware of Chinese comments to the Prime Minister on their preference for an Anglo/French solution. Before reaching

a view on the UK's proposals for collaboration the French wanted

to discuss the project further with Vice Minister Li Peng in

Paris, prior to his visit to this country. In any case

they would be unable to keep Alsthom, the French turbine manufacturer, out of the running at this stage. French

officials also claim that Li Peng said that were it not for the

"Hong Kong Factor" he would be content for France to build the

whole plant on the lines of their experience with the French domestic programme. But because of Hong Kong's interest it was essential to have some British industrial participation in the

project.

PRESENT POSITION

5.

The Chinese indicated that further discussions on finance

were the main aim of their discussions in France and the UK. We

have offered loans at 10% over 15 years, with a provision for local costs up to the equivalent of 15% of UK content, on the

/conventonal

CONFIDENTIAL

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