CONFIDENTIAL

BRIEF NO 6

PRIME MINISTER'S VISIT TO CHINA AND HONG KONG, 18-21 DECEMBER 1984

CHINA

BILATERAL ISSUES: BACKGROUND NOTES

a)

1.

UK-China Relations: general

Since the early 1970s British Government have sought to

establish closer relations with China both to sustain a modus

vivendi over Hong Kong and in recognition of China's growing economic, political and strategic importance. Contacts increased to some extent after Ambassadors were exchanged in 1972, and much

so after Mao Tse-tung's death in 1976 and the emergence of

Deng Xiaoping's reformist leadership.

2. The Chinese Government have in recent years also worked to

foster exchanges in all fields, mainly because of:

a) their perception of the Soviet Union as the main threat to China's security and world peace, and the belief that Britain could play a part in discouraging Soviet expansionism;

and

b)

their need for access to Western, including British,

technology and skills as a vital part of their development

programme.

3. Since 1982 the relationship has been dominated by the negotiations over the future of Hong Kong. Both sides opted, however, for a "business as usual" approach to exchanges in other fields, and to the presentation of the overall relationship. Now that the negotiations have been concluded, the implementation of the agreement on Hong Kong will continue to be the conditioning

factor in UK-China relations for the foreseeable future. Both sides can be expected however to continue to work towards a general thickening of exchanges and, in particular, expansion of trade.

4. So far, relations have been slow to acquire substance compared with those between China and our western competitors. In particular,

CONFIDENTIAL

/trade

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