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the credits are nominally untied but the Japanese are likely to ensure that their suppliers obtain the lion's share of orders.
UK Policy on Aid/Soft Loans for China
5.
In 1979 and 1980 the general view among OECD countries was to avoid getting involved in offering aid/ soft loans to China. We were particularly keen that there should be no breaking of ranks, principally because we did not have the resources to match offers likely to be made by other countreis. But there has been increasing evidence of other countries succumbing to Chinese pressure to offer cheap credits or aid if that country's firms wish to win particular contracts. I attach Mr Atkinson's letter of 9 November putting in a plea that we too should look again at our policy. We have begun an exercise in Whitehall to consider the possibilities of moving in the direction suggested by Peking; As Sir P Cradock said. in his telno 750, we should try to reach a decision before the Prime Minister's visit.
Tigh
22 December 1981
H L L Davies
Far Eastern Department
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