HK3AGP
RESTRICTED
Background
1.
When Sir Y K me t 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$10 m, and raise a similar amount from
his private sector contacts, provided that the Chinese
Government made a
commitment of US$20 m and we put up
US$10 m. The fund would operate over 10 years. He said
that Deng Xiaoping had already expressed willingness to him
to participate in a scheme on these lines.
2.
i t
The proposal offered an attractive and cost effective
way to bring about a significant increase in the number of
Chinese students in Britain. Fortuitously i t came at the
time when we were preparing to withdraw from UNESCO. The
funds thereby released made
possible to contribute
(although Sir Y K should not be made aware of this). The
Prime Minister therefore wrote to Sir Y K
principle his invitation to participate, subject to
agreement on the details of implementation; but making
clear that we could not provide a capital sum; we envisaged
instead making annual grants of £700,000.
accepting in
i t
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. Un our
side,
the ODA (from whose vote Our contribution will come)
have recently sent Sir Y K a paper (copy attahced)
explaining how we would like
like to see the scheme operate. We
hope that we can reach broad agreement with him on
contents during his visit to London.
its
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