CONFIDENTIAL

encouraged further.

But even if they are maintained,

Britain will need to look at a closening relationship

with China in a wider international context which

embraces other countries of immediate importance to

the UK. There is no question of undervaluing China's

importance; but we need both to be coolly realistic

and to keep the balance in our overall relationships

right.

3.

Irrespective of the way the Chinese order their

society, there is no alternative to treating as a world

power a country which is a permanent member of the UN,

has perhaps one-quarter of the world's population in a

territory the size of the United States and traditions

and resources which make her formidable even against

the background of enormous demographic problems.

Given the great differences in China's culture and

her history of self-containment, it is not surprising

that the West's, and Britain's, relations with her in

the past have often been unhappy.

It is not long

since China effectively renounced an alliance with the

country which is still our main adversary.

Memories

of Korea, the Sino-Indian War and Vietnam die hard;

you yourself need no reminding of the horrors of the

Red Guard years.

This makes the friendlier face

which China is now turning to the West the more welcome

and I believe we should respond to it, while remembering

that profound differences between China's view of the

world and our own are likely to persist.

As I see

/it "friendship"

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