TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 48

CONFIDENTIAL

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recognition of the British interest in the project through Hong

Kong.

3

In effect, the French appear to have rejected our overtures

for co-operation on this project - and to have played a strong

hand to win the whole project. It would not be acceptable to us

or to GEC simply to be sub-contractors for comparatively minor

items of plant.

In the light of this I have reconsidered our negotiating

position. Despite their excellent engineering capabilities and

proven export record, GEC cannot match the depth of PWR

experience which the French can offer. It is not easy to

determine how far our weaker industrial position is counter-

balanced by our position in Hong Kong. In the present delicate

state of negotiations on the future of the territory, it may not

be possible to play this card too hard. In informal discussions

with my officials over the last couple of years Lord Kadoorie has

indicated that he would be unwilling to refuse outright to

purchase power from a nuclear station in which the UK did not

have a major industrial role, though he would be less willing to

purchase a major share of the electricity output in the early

years.

In the present climate the Hong Kong Government too may

not wish to press British industrial interests too hard.

My

vie: is that to secure the conventional island for GEC we shall

need to enhance the Hong Kong card with an attractive credit

package.