CONFIDENTIAL

(b)

(c)

(d)

2.

Xian, This was the choice when the visit was scheduled for October because it combined business (the Rolls-Royce Spey project) with historical and archeological interest, and because the Secretary of State was to have left China by the westabout route. The touristic attractions are strong, in particular the recently excavated army of life-size pottery figures intended to guard the tombs of the famous emperor Qin Shihuang (who unified China in 221 BC). However it has emerged that there would not be a great deal for the Secretary of State to see if he visited the factory built to produce the Spey engine. The contract for technology transfer on the engine has now been completed and there are no longer any Rolls-Royce personnel permanently stationed in Xian. Moreover no Spey engines are currently being produced there (because of planning failures the Chinese have not yet developed an air frame into which the engine could be fitted), though Rolls-Royce have sub-contracted the manufacture of some small components for the Spey as a goodwill gesture. Rolls-Royce nevertheless regard the collaboration on Spey as very successful and believe that the Chinese are fully satisfied with it. They have put proposals to the Chinese for further collaboration. As it happens the Deputy Chairman of Rolls-Royce (Mr Pepper) and other senior colleagues are planning to visit Xian in early April to present the Chinese with an exhibition version of the Spey engine for permanent display at the factory. The ceremony could be timed to take place while Lord Carrington was in Xian and this would help to justify the visit, if it appealed.

A Chinese aircraft would probably have to be used for the flight to Xian. It might then be convenient to pick up the VC 10 at Shanghai (approximate times: departure from Xian at 1200 on 5 April would mean arrival in Tokyo at 1900 (local));

Chengde: the former Imperial summer resort of Jehol, some 200 kms north east of Peking. A visit there would make a pleasant break but would have no 'business' content. We would need to check with the Chinese whether its airport could accommodate the VC 10 (unlikely) or whether a special Chinese aircraft could be arranged;

Datong: an important mining centre some 250 kms west of Peking and the site of impressive Buddhist cave paintings. There is British equipment in the mines. Mr Varley visited Datong in February 1979 as Secretary of State for Industry. Travelling to Datong by aircraft might be difficult (Mr Varley went by over- night train).

Sir P Cradock's preference is for Shanghai. He would not recommend either Chengde or Datong.

CONFIDENTIAL

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