CONFIDENTIAL
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be a touchstone of whether and how soon they would be welcomed as a full participating member of the international community.
Senator Baucus said that a lot of senators still had a fairly negative view of China as far as trade abuses, human rights violations and poor compliance with non-proliferation obligations were concerned. It would be helpful if China could be encouraged to show some signs of progress on all these fronts. The Governor thought that the Chinese were not insensitive to these perceptions. One of the reasons that they eventually came to the negotiating table on Hong Kong was probably their concern that if they took an unreasonable line this would play badly in the MFN debate. This also might explain their lack of histrionics in the talks so far. It would be interesting to see if their mood changed after the MFN decision was made in June. It was difficult to say, hand on heart, that their attitudes were changing fundamentally. They had of course engaged in some concentrated additional spending (amounting to some $2bn) on U.S. imports in the last few weeks to try to redress the trade imbalance with the States, but it was not clear whether this spending would in any case have taken place over the course of the year. They had released some political prisoners; but this was seen by most to be mainly a token gesture.
The Governor added that while there was a good deal of concern on the issues of human rights and weapons proliferation, China remained a very attractive market for U.S. businessmen as it did for British businessmen and others. The Chinese were adept at making the point to foreign businessmen that the commercial opportunities for them were very considerable indeed, provided that their Governments pursued sincere and correct policies towards China. It was an effective way of mobilising an internal lobby in China's favour.
Senator Baucus ended by wishing the Governor well over the next few months. The Governor hoped the Senator would call in again on his next visit to Asia.
M.J. Dinham
5th May 1993
CC: CS
FS
PA
PS/CH IC
Mr. Pattison, BE, Washington Mr. Wiggham, HKETO
Mr. P. Ricketts, HKD, FCO
Mr. Llewellyn
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