CONFIDENTIAL
DSR 11C
SECTION II: WHAT DOES CHINA WANT FROM THE UNITED KINGDOM?
25. As noted in Section 1, China is seeking the rapid
modernisation of her economy, and she will need
technology from abroad.' There are a number of possible
sources. As far as other communist countries are
concerned, Sino-Soviet tensions may lessen and practical
cooperation and trade between China and the Soviet Union
and Eastern Europe increase, but the underlying mutual
hostility and fear will remain. The Soviet Union and
the East Europeans will therefore not become major sources
of capital goods and technology, and will certainly not
supply defence equipment in any quantity.
In the United
States, domestic political considerations, historical
perceptions and constraints deriving from American
relationships with Taiwan and China's neighbours will
continue to limit trade, while military sales, at least
of offensive equipment, are likely to remain banned.
This leaves Japan and Western Europe as the main sources
of equipment and technology for China. Although the Sino-
Japanese long term trade agreement will cover about
$10,000 million of plant and construction materials to be
imported between 1978 and 1985, Western Europe will
nevertheless remain an important potential source of
such imports, partly because the Chinese will not wish
to become overly dependent on any one foreign country.
Strategically, China views increased trade as a means of
strengthening Western Europe against the Soviet Union.
Economically, the transfer of advanced technology from
/Western
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