CONFIDENTIAL
stalled on account of last year's events.
They have subsequently
made it clear that the language adopted at the Summit provides cover
for their going ahead with the Yen Loan. There have been a number
of technical meetings between the Chinese and the Japanese on the
loan. Initial feasibility studies are now complete and it has
apparently been agreed to disburse the loan in three stages; in
September, December and February/March 1991 respectively. The Japanese have told us that they would for the time being however,
wish to avoid giving China the impression that the tap had been
fully turned on. The emphasis of the first tranche would therefore
be on reinforcing support for projects already underway; supporting the living standards of ordinary Chinese; supporting progress
towards economic reform. The loans will be untied.
3.
The Japanese have for the most part adhered to the other
measures adopted by the Paris Summit. But there has nonetheless
been a steady flow of senior Japanese politicians visiting China,
often former members of the Government, which has maintained the
impression of a high level of Japanese interest in resuming normal relations with China. A wish to keep in step with Western partners is now the main factor preventing a complete return to business as
usual. Former Prime Minister Takeshita is to visit Peking in
September (to mark the opening of the Asian Games in Peking).
may visit as a personal envoy of Prime Minister Kaifu.
EC/China Relations
He
4. We have continued to argue within the Twelve for a further
relaxation of the EC policy towards China. In particular, we have
sought a relaxation of the suspension of high level and ministerial
visits and of the ban of new concessional finance (we have not
sought relaxation of the suspension of arms sales or of high level
military contacts). A further round of informal contacts with EC
partners following the Houston Summit revealed a continuing lack of consensus for such a relaxation, with France and Holland taking a
hard line. The position is likely next to be reviewed at ministerial level following the proposed EC Troika Ministers meeting with Chinese Foreign Minister Qian Qichen at UNGA in September.