MR FURNESS
HKD.
RESTRICTED
11 April 1991
A Heath Esq
First Secretary Commercial
British Embassy
Washington
Foreign &
28
Commonwealth309/4
Office
London SW1A 2AH
Telephone: 071-
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20%
Aew Ancerews
US/CHINA TRADE AND MFN
1.
(20
Many thanks for copying to us your letter of 12 March to Ms Clark, DTI. I found this a most interesting and useful survey of US/China trade relations and the prospects for MFN renewal.
2. You will have seen (Peking telnos 478 and 479) that both Premier Li Peng and Foreign Minister Qian Qichen raised the issue of MFN renewal, and UK support for China's case, during the Secretary of State's visit to Peking. This is a clear indication of the seriousness with which the Chinese approach this issue. I was interested in your assessment that there has been a worsening in both the political and trade atmosphere surrounding this question. It may be that with the memory of the recent trials of dissidents now receding, the immediate focus on human rights problems will fade. Nonetheless as your letter points out, there is an impressive catalogue of trade related disputes between the US and China which will spill over into the MFN debate. In this connection it is hard to reconcile Prime Minister Li Peng's assertion that China ran a trade deficit with the US with the American view that China is now its third largest bilateral deficit. There is a similar discrepancy in our own trade figures vis à vis China; both we and the Chinese claim we are in deficit. But the difference between the two positions, which can be at least partly explained by different accounting methods, is far smaller.
3. Hong Kong: you will have seen Hong Kong telno 1062 outlining its lobbying strategy for the retention of China's MFN status which is of course of enormous
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