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OUR RESPONSE
(a) (i) Recognise constraints on Chinese trade of foreign exchange pressures, risk of overheating economy and wish to have better balanced trade with West and, especially Japan. Increase in world trade and world GNP is best solution. Recent developments will
help. Quotas decided by EC.
(ii) In visit to Oxford will see UK in forefront of science and technology. We can apply it commercially, eg Oxford Instruments. UK's worldwide reputation for quality. Willing to transfer technology. Strong programme of government- supported research and technology cooperation.
Tokyo Summit
(b) (i) Successful NATO meeting in Halifax. declaration showed determination of West to tackle issues such as terrorism. People in Western Europe will support firm lines, eg
success of Mr Lubbers in Netherlands elections.
(ii) British society is tackling racial and social problems: eg housing, education, the effects of industrial change. We are innovative in design, management, production, marketing: in basic science, in the arts and in social reforms.
(c) (i) More Ministerial visits from China needed. On UK side, Lord Young hopes to go again, perhaps in November, Mr Peter Walker in December. Mr Timothy Raison next month, Sir Geoffrey Howe with The Queen. Mr Paul Channon, too, perhaps later this year.
(ii) Such contacts should be practical. Need to live up to expectations created. Bilateral trade still lower than it should be. Lord Young will take industrialists to look at particular sectors in depth. Opening of consulates in Shanghai (1985) and Manchester (1986) will help boost trade and other relations. (d) (i) Assure you we will proceed with caution, taking into account provisions of Joint Declaration. But must be responsive to public opinion in Hong Kong. Hong Kong a living political organism. (ii) Also interested to know how you see the Taiwan question progressing. Glad aircraft incident resolved speedily and satisfactorily. Glad Hong Kong able to play helpful role. Continued prosperity and stability of Hong Kong up to and beyond 1997 can only help solution of Taiwan problem.
CONFIDENTIAL