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9.
On the educational, scientific and cultural side, all the graphs are going up and up. There are more Chinese students in Britain than ever before - 2,800 and rising and the State Education Commission say that in the course of this year they expect Britain to overtake West Germany as the leading host nation in Europe for Chinese students. This is splendid, since roughly one in three of those going to Britain gets any official British subsidy, whereas the Germans are subsidising all theirs. There are more short term exchanges, more English teaching, and more academic links at the working level. The biennial Cultural Exchange Agreement talks in April went smoothly. Art tends to be an "also-ran" in the welter of scientific and technical exchanges, but we had a smash hit in April with Sadler's Wells Royal Ballet's tour of Peking, Tianjin and Shanghai, and the commercial sponsors, Glaxo, pronounced themselves well pleased with the publicity they got from this joint venture with the British Council.
10. Another important area, namely commercial effort, shows somewhat mixed results. Whereas the Germans and Italians held about 9% and 4% of the market respectively, Britain's exports in the region of 400 million pounds only represent about 1%. The number of British firms established in Peking barely exceeds two dozen. British defence firms had a lean year with few major contracts signed, although at the year's end a number of defence sales projects have emerged giving better expectations for 1989. The largest contract under the soft loan agreement of May 1986 and in many ways seen as the symbol of future commercial cooperation between Britain and China, was that relating to the Yue Yang Power Station. By the signature of this single contract we cleared at a stroke the bulk of the first 300 million pound soft loan and thus paved the way for a new facility. Mr Chris Patten was able to sign
a further soft loan for 300 million pounds during his visit in September. We signed ten ATP contracts in the course of the year and in July alone, five contracts were signed worth nearly 40 million pounds. At the year's end our exports are slightly down on 1987, a little frustrating in a year when Chinese imports rose by 21% overall. However, the 1988 deals done on concessional financing terms will come through and ultimately show to great advantage in the trade figures. The new 300 million pound loan is not only of importance as a symbol but also in terms of our ability to maintain our commercial effort here in the light of the Chinese cut-backs on capital projects. Concessional financing will remain of crucial importance in
1989.
The latest British arrangement has been acknowledged by the Chinese as a constructive and important gesture and possibly the most flexible of all such arrangements available from other countries.
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