eq. coral for Hk.
paneet station равет in retum for
окшина equipment
(sarce 1970 he
by Marke average ont
about 0.477.
Prince experts))
CONFIDENTIAL
DSR 11C
equipment unless assured of secure long term supplies, which the Chinese have so far been unwilling to guarantee. Moreover, production and logistic/problems as well as risin
domestic demand in China will inhibit rapid growth in the
surplus available for export. The remainder of China's
export growth potential lies in the extractive industries
and those based on agriculture. Neither is amenable to
rapid increases in output.
29.
While the Chinese are prepared to use deferred payment
and short-term inter-bank arrangements to finance their
imports, they have consistently refused offers of long-term
buyer credit from Western banks. In spite of rumours in
the press, officials continue to stick forcefully to this
line. In the near future they will probably be prepared
to increase their short-term debt. Eventually, as their development plans for the economy unroll, there is a good
chance that they will overcome their ideological objections
to long-term buyer credit. Such a decision would
significantly increase their import capacity, as their
credit rating is excellent and Western banks would be very
ready to lend them large sums. The Chinese may also
increasingly seek barter deals as a means of financing
imports eg the exchange of Western equipment for raw materials or the produce of Westfínstalled plant.
30.
China will never become one of Britain's major trading
partners, but at a time when world trade prospects are
uncertain, she could offer a steadily expanding market for
British industrial goods. The UK cannot hope to compete
on an equal footing with the Japanese, with their super-
competitive economy, their geographical proximity, their [
CONFIDENTIAL
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