RESTRICTED
SIR Y K PAO'S CALL ON THE PRIME MINISTER, 21 MARCH
Background
1. When Sir Y K met the Prime Minister in October 1985 he proposed the establishment of a trust fund to enable more Chinese students to study in Britain. He offered to provide a capital sum of US$10m, and raise a similar amount from his private sector contacts, provided that the Chinese government made a commitment of US$20m and we put up US$10m. The fund would operate over 10 years. said that Deng Xiaoping had already expressed willingness to him to participate in a scheme on these lines.
2.
He
The
The proposal offered an attractive and cost effective way to bring about a significant increase in the number of Chinese students in Britain. Fortuitously, it came at the time when we were preparing to withdraw from UNESCO. The funds thereby released made it possible to contribute (although Sir Y K should not be made aware of this). Prime Minister therefore wrote to Sir Y K accepting in principle his invitation to participate, subject to agreement on the details of implementation; but making it clear that we could not provide a capital sum; we envisaged instead making annual grants of £700,000.
3.
Subsequently, we have had initial discussions both with Sir Y K's representative in London (Mr Stephen Pan) and with the Chinese authorities. It is not yet clear how the latter intend to contribute: they can be expected to try to minimise their foreign exchange commitment, but appear so far not to have considered the scheme in detail. On our side, the ODA (from whose vote our con- tribution will come) have recently sent Sir Y K a paper (copy attached) explaining how we would like to see the scheme operate. We hope that we can reach broad agreement with him on its contents during his visit to London.
4.
The ODA paper seeks to make clear our wish for rapid implementation of the scheme. It proposes building as far as possible on the well-proven administrative arrangements for the ODA Technical Cooperation Training Scheme, under which some 320 Chinese students are currently in Britain. At the same time, it reflects our requirement of effective control and supervision of the way in which our contribution is spent. The major specific proposals are:
RESTRICTED
i25ace 3
/i)