5. THERE HAVE BEEN FEW SIGNS OF IMPROVEMENTS IN SINO-SOVIET POLITICAL RELATIONS. THERE HAS BEEN NO PROGRESS ON THE THREE OBSTACLES, WHOSE REMOVAL REMAINS A CHINESE PRECONDITION FOR IMPROVED RELATIONS (AFGHANISTAN, CAMBODIA, AND SOVIET TROOP DEPLOYMENTS NEAR THE CHINESE BORDER). HOWEVER, ECONOMIC, SCIENTIFIC, TECHNOLOGICAL AND CULTURAL RELATIONS HAVE DEVELOPED. THE MOST SIGNIFICANT DEVELOPMENT HAS BEEN THE SIGNING OF A 5 YEAR LONG TERM TRADE AGREEMENT IN JULY 1985, WHICH TARGETS THE VALUE OF TOTAL TRADE TO RISE TO USD3.7 BILLION BY 1990. ACCORDING TO CHINESE STATISTICS, THE LEVEL OF TRADE INCREASED BY 38.1% IN 1985. SOVIET FIGURES ARE RATHER HIGHER. THERE IS NO REASON TO BELIEVE THAT THERE WILL BE SIGNIFICANT PROGRESS IN POLITICAL RELATIONS IN THE FORESEEABLE FUTURE.
6. GEOGRAPHIC PROXIMITY AND ECONOMIC COMPLEMENTARITY ENSURE THAT SINO-JAPANESE RELATIONS ARE SIGNIFICANT BILATERALLY AND, INCREASINGLY, WITHIN THE ASIA PACIFIC REGIONS. JAPAN IS CHINA'S LARGEST TRADING PARTNER AND CHINA IS FOURTH AMONG JAPAN'S TRADING PARTNERS. SINO-JAPANESE RELATIONS HAVE BEEN PASSING THROUGH A DIFFICULT PHASE, LARGELY BECAUSE OF THE INCREASING TRADE DEFICIT. HOWEVER, THERE HAVE ALSO BEEN EXPRESSIONS OF CHINESE CONCERN AT A VISIT BY PRIME MINISTER NAKASONE TO A SHRINE ASSOCIATED WITH MILITARISM. ALTHOUGH IT IS NOT CLEAR HOW THE CONSIDERABLE TRADE IMBALANCE (USD6.2 BILLION) WILL BE ADJUSTED, IT IS UNLIKELY THAT THESE DIFFICULTIES WILL BE ALLOWED TO THREATEN THE RELATIONSHIP SERIOUSLY.
7. IN PURSUIT OF ITS DOMESTIC MODERNISATION AND ITS INTERNATIONAL OBJECTIVES, CHINA'S FOREIGN POLICY HAS BECOME MORE ACTIVE. CHINA HAS MADE SUBSTANTIAL DIPLOMATIC EFFORTS TO IMPROVE ITS RELATIONS WITH ASEAN STATES IN RECENT YEARS. MORE OPPORTUNITIES ARE BEING TAKEN TO RESTATE FORCEFULLY THE CHINESE POSITION ON DISARMAMENT, AND IN MARCH THIS YEAR PREMIER ZHAO ANNOUNCED THAT CHINA HAS DECIDED TO DISCONTINUE ATMOSPHERIC TESTING OF NUCLEAR DEVICES.
8. IN HIS SPEECH AT THE OPENING OF THE FOURTH SESSION OF THE NPC ON 25 MARCH THIS YEAR, ZHAO DESCRIBED THE PRESENT PERIOD AS CHINA'S BEST IN FOREIGN POLICY SINCE THE FOUNDING OF THE PRC IN 1949. THERE ARE PLANS FOR HU YAOBANG, ZHAO ZIYANG AND WU XUEQIAN TO VISIT A TOTAL OF AT LEAST EIGHTEEN WESTERN AND EASTERN EUROPEAN COUNTRIES IN THE SPACE OF THREE MONTHS THIS SUMMER. THE CHINESE CONTINUE TO SEE WESTERN AND EASTERN EUROPE AS A POLITICAL COUNTERWEIGHT TO THE SUPERPOWERS. THEY WANT CLOSER RELATIONS BETWEEN THEM.
CONF
2
CONFIDENTIAL
19. DURING