CONFIDENTIAL
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14.
Mr Sonoda said that Japan would begin negotiations with the Chinese for a Peace and Friendship Treaty on 21 July.
Such a treaty would contribute to the stability of Asia and the ASEAN countries. The Soviet Union had made certain representations to the Japanese about this treaty: they were not in favour. Soviet representations would not affect the basic Japanese view. But Japan wished to promote good relations with the Russians, as well as with China.
15. China was modernising 'her agriculture and her army. Japan wanted stability in Asia, not a confrontation between China and the Soviet Union. The military modernisation of China might help to achieve a better balance between her and the Soviet Union, and was hence to be welcomed. France had recently agreed to export some arms to China. Japan would very much welcome British exports of arms to China too.
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16.
Mr Sonoda had met the Governor of Hong Kong a few weeks ago. It was good to know there were no problems for the moment about Hong Kong's status. Hong Kong contributed to the modernisation of China, and had a beneficial influence in the Far East and ASEAN countries. Dr Owen said that Hong Kong was something of a barometer of Chinese relations with the West. There was now very little doubt that China's relations with Hong Kong would continue to prosper.
If the Chinese continued in their current attitude, the future of Hong Kong would be secure. There was no need to raise the issue of the status of Hong Kong. Britain certainly had no urge to "do away with an ex-colony". We would stay there in perpetuity, if possible. We shared Japan's optimistic view of Hong Kong's future.
17. Returning to bilateral matters, Dr Owen thanked Mr Sonoda for Japanese patience over the Windscale enquiry. This had taken its course, and there was no longer any serious protest movement against our reprocessing at Windscale. Japan could now regard the BNFL contract as stable. Dr Herman Bondi of the Department of Energy had also told Dr Owen of his good relations with the Japanese in the INFCE. Mr Sonoda said that the Japanese had been glad to sign the contract on reprocessing. On trade, Japan would continue to make every effort to improve the balance, and would welcome increased export efforts by the United Kingdom.
18.
Dr Owen said that he had two final points. First, he hoped that there would be some association between the Japanese and URENCO; and secondly, he would welcome Japanese financial assistance for Mr Roderick MacFarquhar's idea of a Japanese Institute to promote the study of Japanese in the United Kingdom. On URENCO, Mr Sonoda recalled that he had met the President of the Company recently in Tokyo. He promised to give careful consideration to helping Mr MacFarquhar's Institute.
21 July 1978
CONFIDENTIAL