CONFIDENTIAL
CHINA INTERNAL: HONG KONG, TAIWAN
1. Most of those whom I met commented in passing on the internal state of affairs in China, and some had some useful thoughts for us over Hong Kong and its relationship to the Taiwan question.
2. Vereshagen of the Far Eastern Department of the Soviet Foreign Ministry, who had accompanied Kapitsa to Peking, said that after many years of absence from China he had found a new air of professionalism and confidence there particularly among industrial managers. He predicted an extended period of internal stability, but said that for the Soviet Union it did not matter who the Chinese leaders were as Sino/Soviet relations could proceed satisfactorily anyway.
3. Asai, the Head of the China Division in the Japanese MFA spoke at some length about China's stability. He thought that the recently announced decision on party rectification was a major step and demonstrated the funadmental unity among the party leadership and in particular the extent to which Hu Yaobang was carrying out Deng's wishes. The problems at the higher levels had he thought been more or less ironed out by now and the focus had turned to the middle levels of the party. Other Japanese said that Asai was known to be rather optimistic about China's leadership and its stability and implied that there were differing views. The present Minister at the Japanese Embassy in Peking, Watanabe, confirmed however that the over-riding desire of the Chinese was a peaceful international environment, and this together with the continuing perception of China as the Middle Kingdom and everybody else as of lesser importance constituted a firmly understood basis shared by the present leadership.
4.
Mr Freeman in the US Embassy in Peking speculated that something was going on between China and Taiwan. The recent interview given by Deng to an American journalist, in which he had said that Taiwan would be able to import arms and issue visas even after reunification, had been passed immediately to the Taiwan leadership, and Mr Freeman thought that there could even be secret talks. This might be useful for us over Hong Kong, in that Taiwan would never accede to any Chinese proposals if the Taiwanese leadership saw Hong Kong going badly under China's control. Asai in the Japanese MFA followed a similar line without supporting the secret talks thesis. He said that the Taiwan leadership would watch Hong Kong very carefully, and that the Chinese for their part saw Taiwan as the most important issue for them and were therefore genuinely fearful both of the Hong Kong negotiations going wrong and of any substantial delay.
CONFIDENTIAL
/Asai