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now faced with the decision to pay the administration

costs of student exchanges and to subsidise the

teacher recruitment exercise or allow them to fail.

4.

We have argued that the Chinese should see the

cost of the educational services they are seeking in

the context of what Britain is offering as a whole.

It appears, however, that the Chinese on the contrary

take a narrow view of educational exchanges and

expect Britain to offer assistance no less generous

than our major Western allies and commercial

competitors. In the circumstances I should like the

British Council and the Department of Education and

Science to go ahead with a revised programme of

educational exchanges' which would involve our

carrying the administration costs of Chinese students

in this country and subsidising the costs of sending

British lecturers and teachers to China.

.5. If we do not do this, we shall not be able to

make a full contribution to China's educational plans

for modernisation and thus we shall not secure the

many-stranded relationship which we are seeking with

the Chinese. Our competitors will benefit; and there

could be adverse consequences for our political and

commercial interests.

16.

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