CHINESE OBJECTIVES

CONFIDENTIAL

(a) (i) To emphasise that modern China remains committed to economic reform and open to the outside world, despite a difficult year in

1985.

(ii) Against this background to encourage increased assistance to, and cooperation with, China particularly over economic development, scientific exchanges and education.

(iii) To increase exports so as to generate the foreign exchange needed for investment in development projects.

(b) Reassurance that Western Europe will remain strong, united and an effective political counterbalance to the Soviet Union and (to some extent) to the United States.

(c) To promote closer bilateral relations, partly as a consequence of the Hong Kong agreement and partly to reinforce it.

(d)

V

-

(i) To seek reassurance yet again that we have no surprises in store on Hong Kong, especially over constitutional development;

and, perhaps

(ii) to explain Chinese thinking on Taiwan (and implications for Sino-US relations) and Macau (in the context of their thinking on

Hong Kong).

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