TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 34

Framatome, with Framatome as lead contractor. I believe the

Chinese took this message fully on board. However, they

continue to be concerned about the risks of taking GEC's first

900 MW high speed set rather than Alsthom's twenty fourth low

speed set.

4 As expected the Chinese asked both for aid and for

capitalisation of pre-commissioning interest. My officials

explained that aid could not be given because of the understand-

ing among the western countries that aid should not be offered on

nuclear projects We understand from the Chinese that the

French have refused to offer aid as such, and the Chinese

appeared to accept our refusal. On capitalisation, in view of

Chinese proposals for further Government to Government

discussions in Peking next year, and a clear unwillingness to

commit the conventional island contract to GEC at present, I

decided that we should make no further formal enhancement of our

credit terms at this stage. I simply indicated to the Chinese

that capitalisation was for consideration, but decisions would

depend on the shape of the total project, and principally the

awarding of the conventional island project to GEC.

5 The Chinese raised again the size of CLP's proposed equity

holding. Li Peng accepted that CLP could not shoulder the

liabilities consequent upon the 40% holding originally envisaged

but pressed that Hong Kong interests should together take a 25%