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expressed the hope that the British side would set a limit on price escalation and would help over the OECD consensus rate. In sum, he was asking that Britain should give favourable terms. The Prime Minister pointed out that GEC had great experience in building generators of high quality, even if they had not made them of this particular size. She was fully confident of GEC's ability. As to the point about price, she would pass this on to Lord Weinstock. She would also pass on to those concerned the point about price escalation. She commented that one factor in price escalation was inflation, and this was the responsibility of governments to control. The British Government was playing its part in this respect.
25. On aerospace
the Prime Minister welcomed the news of the signature of a memorandum of understanding under which China intends to buyfive Airbus 310. It was also welcome that a memorandum of understanding had been signed for fifteen 36- seater Short Brothers aircraft. The Prime Minister went on strongly to urge the Chinese Government to buy the BAE 146, referring to the successful demonstration tour in July and to the long period of negotiations. She listed the airlines which had already ordered the aircraft and referred to BAE's long relation- ship with CAAC. Premier Zhao said that it was true that CAAC would be buying many aircraft. He would convey what the Prime Minister had said about the BAE 146 and thought that CAAC would take this into positive consideration.
26. More generally, Premier Zhao thanked the Prime Minister for her positive observations on political and economic bilateral relations. China had always attached importance to cooperation in the technological and economic field. In recent years a number of Sino-British agreements had been signed which had opened up new vistas for development of these relations. China had a number of times expressed the hope that the percentage of her foreign trade occupied by Western Europe would increase. Now a satisfact- ory agreement on Hong Kong had ushered in a new era for friendly Sino-British cooperation. One aspect of this should be an increase in economic and technological interchange. It was China's policy to increase trade with Britain, but it was for Britain to enhance the competitiveness of her products. China took considerations of quality, price and transfer of technology terms into account in deciding on which products she should buy. She did not consider price alone. The attitude of Western European countries, including Britain, to transfer of technology was more liberal than that adopted by the US and Japan. Premier Zhao agreed that areas for Sino- British economic cooperation included offshore oil, where British companies had much expertise, coal, where not only British equipment but also British design and management techniques were advanced
(Premier Zhao mentioned that he had been very impressed with British design for the Jining No 2 Coal Project in Shangdong), energy saving equipment and aircraft.
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