CONFIDENTIAL
(b) Sterling Bonded Debt
We regarded the Chinese Government as the successor to earlier Governments and so liable to pay bonded debts estimated at about £60 million nominal capital plus accumulated arrears of interest of more than twice that amount.
(c) Losses by British Firms and Private Individuals
These included claims by British firms who were forced out of business in China after 1950, a large number of claims for property formerly owned by private individuals and bank accounts "frozen" under Chinese Exchange Control Regulations.
(d) Shanghai Pensions
The British Government has paid a total of about £24 million to pensioners of the Shanghai Municipal Council. Under the terms of the 1943 Treaty in which the British Government had relinquished extraterritorial rights, the Chinese Government undertook to honour Shanghai Municipality's obligations.
Mr Cortazzi said that Mr Cradock would raise the matter in Peking with Mr Sung on the latter's return.
Mr Sung said that Sir Anthony Royle had discussed these matters with him in 1973. He had handed over a long list of claims which was as thick as a book. Mr Sung had forwarded the list to the department concerned, but so far he had had no news. He would look into the matter again. Mr Cortazzi thanked Mr Sung for this assurance. He said that the matter had relevance for the future. For example, there was the question of credits. A sympathetic consideration of these issues by the Chinese authorities would be helpful in that context. Mr Sung said that there were principles laid down guiding policies concerning matters left over by the Kuo Min Tang Government.
INTERNATIONAL ISSUES
Mr Cortazzi also raised two international issues:
(a) Law of the Sea
Mr Cortazzi said that there was discussion about coastal states' rights over the Continental Shelf. The Soviet Union had proposed limiting these rights to a maximum of 300 miles from the shore. The UK was opposed to this since it was disadvantageous to our Continental Shelf rights. The UK supported the Irish formula. This was based on the internationally accepted principle of the natural prolongation of the land mass. The UK were glad to see that the Chinese also supported the Irish formula and welcomed the links between the Chinese and UK delegations to the Law of the Sea Conference. The UK believed that the Soviet Union was losing confidence in its
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