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025665
MDLO 682
WERE NOT CONVINCED THAT ECONOMIC REFORM WAS BEING PURSUED WHOLE-HEARTEDLY THERE WAS AN UNRESOLVED TENSION ON THIS ISSUE BETWEEN REFORMISTS AND CONSERVATIVES IN THE LEADERSHIP. SECONDLY, WHILE POLITICAL STABILITY WAS IMPORTANT, BOTH FOR CHINA AND FOR CHINA'S NEIGHBOURS, WE DID NOT WANT TO SEE STABILITY ACHIEVED THROUGH REPRESSION. BUT WE HAD REACHED THE SAME CONCLUSIONS AS THE JAPANESE ON THE NEED TO RELAX SOME OF THE RESTRICTIVE MEASURES. WE HAD ALREADY BEGUN TO SOUND OUT OUR EC PARTNERS. MOST WERE NOT YET PERSUADED OF THE NEED FOR RELAXATION, BUT DISCUSSION AMONG THE 12 HAD ONLY JUST STARTED. AT THIS STAGE WE WERE OBVIOUSLY NOT CONTEMPLATING LIFTING THE ARMS EMBARGO OR RESTORING HIGH-LEVEL MILITARY CONTACTS. OUR PRINCIPAL CONSIDERATION WAS HONG KONG. WE NEEDED TO GET BACK SOON TO A MORE COOPERATIVE RELATIONSHIP. WITH ONLY SEVEN YEARS TO GO BEFORE 1997 WE COULD NOT AFFORD TO WAIT UNTIL A BETTER DISPOSED CHINESE LEADERSHIP CAME TO POWER.
5. OWADA SAID JAPANESE ANALYSTS BELIEVED THAT ECONOMIC REFORM WAS TO WELL ENTRENCHED TO BE ABANDENED. THE
BUT
AUSTERITY PROGRAMME HAD COINCIDED WITH POLITICAL REPRESSION, THE CHINESE HAD REAFFIRMED TO THE JAPANESE THAT THEY WERE COMMITTED TO REFORM. HE AGREED THAT STABILITY WAS NOT AN END IN ITSELF. BUT THE CHINESE WERE CONSCIOUS OF EXTERNAL PRESSURE, AND EVEN TACTICAL RESPONSES TO IT WERE IMPORTANT SIGNALS. MCLAREN AGREED THAT RECENT CHINESE MOVES SHOULD NOT BE DISMISSED, ALTHOUGH THEY HAD ACHIEVED THEIR PRIMARY PURPOSE US RENEWAL OF MFN STATUS.
6. OWADA SAID THAT THE JAPANESE NON-PAPER REFERRED TO IN FCO TELNO 366 TO TOKYO HAD BEEN BASED ON A LETTER WRITTEN BY PRIME MINISTER KAIFU TO PRESIDENT BUSH BEFORE THE PRESIDENT'S DECISION ON MEN. THE JAPANESE DID NOT WISH TO PRESCRIBE WHAT G7 POLICY ON CHINA SHOULD BE. BUT THEY WANTED TO AVOID THE ADOPTION BY THE SUMMIT OF A POLITICAL DECLARATION THAT CONSTRAINED G7 COUNTRIES' ROOM FOR MANOEUVRE. THE G7 POSITION SHOULD BE ARTICULATED IN A WAY THAT ALLOWED EACH PARTNER TO TAKE WHATEVER ACTION IS CONSIDERED TO BE APPROPRIATE AFTER THE SUMMIT. IN JAPAN'S CASE, THIS WOULD MEAN GOING AHEAD WITH PROJECTS UNDER THE THIRD YEN LOAN. OTHER COUNTRIES WOULD HAVE OTHER PRIORITIES. MCLAREN SAID THAT THE US HAD ALSO PUT THE WORLD BANK LOAN ON THE SUMMIT AGENDA. OWADA SAID THAT THE WORLD BANK PROBLEM WAS ANALOGOUS TO THE YEN LOAN. BUT IT WAS ESSENTIALLY A TECHNICAL MATTER: THE YEN LOAN WAS A POLITICAL COMMITMENT, LINKED TO CHINESE RENUNCIATION OF THEIR WAR REPARATIONS CLAIM.
MCLAREN SAID THAT WE WOULD NOT WANT TO PRESS FOR ANOTHER SUMMIT DECLARATION ON CHINA, OR FOR SPECIFIC LANGUAGE ON HONG KONG.
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