CONFIDENTIAL
5.
DSR 11C
7.
There have been times in the past when Hong Kong
has been an irritant in our relations with China. Today
there can be very little doubt that the stability of
Hong Kong, the strength of its economy, and the prosperity
and well-being of its people are as much in the interests
of China as they are of this country. I have welcomed
the growing practical cooperation between Hong Kong and
China, and the many indications which the Chinese have
given that their intentions towards the territory are
benevolent.
But the expiry of the New Territories lease
in 1997 is casting a long shadow forward and it will not be
long before it begins to create problems of confidence
in Hong Kong. The understanding and cooperation of the
Chinese authorities will be required if satisfactory
solutions are to be found.
8.
In the trade field, China's modernisation plans
offer scope for substantial contracts and I see no reason
why Britain should get less of these than our European
partners; competition from the US will now be much
greater. 1979 is a key year for China's future
development plans, and our own prospects in China will call
for a lot of tough and flexible bargaining.
I need not
rehearse the background to the Government's acceptance
that our exports should include some defensive equipment.
But I am determined that the Chinese should not see us only
or even primarily as arms suppliers; we must continue in
dealing with the Chinese to draw their attention to the
need that our trading relations be balanced and include a
high civil element.
19.
Dd 0532000 400 M 5/78 HMSO Bracknell