CONFIDENTIAL
UK OBJECTIVES
3. Both in terms of global strategic policy, and in order to work towards our single most important bilateral goal of ensuring the smooth transfer of power over Hong Kong in 1997, the UK wishes to keep China firmly committed to its current policies of peaceful co-existence internationally and economic and political modernization and reform domestically. This involves taking a stake in maxing the Chinese experiment a success. Our immediate objectives should therefore be: (i) to increase two-way trade and other commercial links with China and (ii) through political, educational and cultural links and an active programme of two-way visits, to engage the Chinese in a dialogue over a widening range of topics. Through a programme of mutually reinforcing elements we should be able to increase understanding of each other's perceptions and problems, reassure the Chinese of the UK's commitment to the modernization programme, and help to bring about a greater degree of Chinese interdependence with the West.
HONG KONG
4.
The principal concern in our relationship with China remains the need to ensure the smooth handover of power in 1997. Hong Kong policy is not covered by this paper, but HMG must ensure, as part of its bilateral exchanges with the Chinese, that UK interests in Hong Kong post-1997 are identified and adequately protected. issues can be identified and resolved through the Joint Liaison Group or by other means, as appropriate.
These
TRADE
In
5. Against a background of falling overall imports into China in 1986 after the rapid increases in 1985, UK exports to China nevertheless improved significantly and exceeded € billion for 1986. But our market share remains relatively small (1.8%). 1985 it was only 30% of FRG's share, compared with 70% of FRG'S share for exports globally. We lag behind the US, Japan, Australia and our major European colleagues (FRG and France), in part because the UK responded slowly to the "open-door" policy, and in part because many UK firms still doubt whether, in the long term, the
FC3AAU
CONFIDENTIAL