P & O Group chairman Lord Sterling has told Chinese Premier Li Peng of the group's interest in investing in a deep-water port in China that could serve fourth-generation vessels. Mr Ian Mullen, executive director of P & O Asia, said that Mr Li had encouraged the British shipping giant to invest in projects ranging from container railways to container yards and container freight stations at the port. ''P & O has several projects under study with the Chinese. It all depends on the outcome of feasibility studies on the level of income that will be generated. That will dictate the level of investment by the company, both in terms of capital and expertise,'' he said. China is expected to pick the site for the fourth-generation port, which would serve as a second deepwater port in addition to that at Hongkong, in three to four months. It is considering the ports of Shanghai, Ningbo and another port 80 or 90 miles north of Shanghai. Mr Mullen said the start of several major projects in China recently had brought a sense of urgency to the rationalisation of port structures. Mr Li had acknowledged that the fourth-generation port would have to be supported by rail, roads and feeder links, he said. The port, he stressed, would play a leading role in the distribution route and provide the outlet for the Yangtze corridor which would become a major development area. Mr Mullen said it was not practical for shipping lines to call directly at Chinese ports as 85 to 90 per cent of cargo flowed through the Pearl River delta into Hongkong. Some of the ports could not even serve third-generation vessels, he said, and direct calls would be premature until some cargo moved to a second port. Presently, mainland ports are served mainly by an intricate network of feeder vessels operated by Sinotrans and China Ocean Shipping Co. Mr Li is also the president of the Three Gorges dam project in southern China. He had stressed that with the completion of the dam and prevention of flooding on the lower reaches of the Yangtze river, industries would spring up on its banks, Mr Mullen said. Presently industries were only found far away from the river bank, he added. Mr Mullen said P & O had gained its experience in dealing with the Chinese from a joint venture which it had established in the port of Tianjin 18 months ago. Lord Sterling, who was visiting China at the invitation of Beijing Hanwei Economic & Technical Development Corp, was accompanied by P & O's representative in Beijing, Mr David Zhang.