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European trading partner, followed by the UK.
6.
Sino-Japanese relations are important bilaterally,
and, increasingly, within the Asian-Pacific region.
Japan is China's largest trading partner and China is
fourth among Japan's trading partners. Economic links
and Japan's regional role seem strong enough to weather
difficulties arising from Japan's large trade surplus,
her decision to break the 1% of GNP barrier on defence
expenditure and Chinese perceptions of Japanese
insensitivity over their historical relationship.
7. In Asia, China has made substantial efforts to
improve her relations with ASEAN states in recent years.
Relations with Thailand have become quite close
(albeit with some reservations on the Thai side) as a
result of the countries' joint interest in resisting
Vietnamese occupation in Cambodia. Apart from support
for the Khmer Rouge, China claims no longer to provide
material support for communist insurgent groups in South
East Asia. However, despite high level visits, Malaysia
is still suspicious of Chinese regional intentions, as is
Indonesia with which diplomatic links remain suspended,
though direct trading links were resumed in 1985.
FC6AAK
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