The London Chamber of Commerce
CONFIDENTIAL
Our ref: NFW/VR.
21 Tothill Street, London S.W.1 Whitehall 6711
18th January 1967.
Members of the Executive Council.
Dear her heres.
The President has asked me to send you copies of
the following:
(1)
(2)
A sheet of press cuttings that carry the recently announced figures for our trade with China. He feels that these are sufficiently impressive and suggests that members take any opportunities of making use of them in appropriate quarters.
A report on his meeting with the Foreign Secretary, Mr George Brown, last week.
A copy of the cutting from the New York Times referred to in Mr Keswick's footnote is also attached for your interest.
for information.
1. Enter
2. Mr. Danion
S.NU.
Praini
paragongh
이
Yours sincerely,
N.F. eob Secretary-General
Jerom
ku
10.
report
Keswiete
이
they 18/1
The
Last
recent meeting with
·
GUARDIAN
-
F. TIMES / 14-1.67.
U.K.'S SUBSTANTIAL TRADE
£31.9m
SURPLUS WITH CHINA
By Our Far East Correspondent
is
since
Balish exports to China rose 28.1 per cent. last year to a total of This is the highest ligure since 1960 when the Chinese
las being prepared for the Great Leap Forward. Imports from China were also
econoń
up substantially but not as much I the situation becomes more stable, as exports: they increased by 138ut there should be a continued flow per cent. lo a total of £3.km.
The trading figures for Devem- ber which became available yesterday show 7 substantial surplus for Reclaın. Exports to Chuna amounted 10 £1,038.494- while Imports wate worth! 12.184,103. The low figure for; Chinese exports may have been partly the result of Mao Tse lung's Cultural Revolution which has shown signs of extending itself to ? the economy in recent weeks
Last year's sharp rise in trade with China wan wekomed yester- day by Mr. John Ketwick. Presi dent of the Sino-Brush Trave Counci. Mr. Keswick told THE Francial Tours that he was pleased and satisfied" with the Kgures, and added that his own estimates of the potential for trade between the two countries had been substantially borne out-if not handsomely exceeded.
H
The volume of twoway trade last year was in fact coughly double that of 1964, the year m which Britain staged a major industrial exhibition in Peking. At the Peking exhibition Mr. Keswick expressed the view that
50 per cent the in trade was a practical possibility.
Views of the prospects for Chine trade 1967 depend on nac's estimates of the extent to which the current upheavals in the country are likely to (abrupt the economy. Some observers feel that China may sign fewer con- tracts for major capital goods until
THE TIMES 16-1-67
U.K. EXPORTS TO
CHINA UP 28%
H
of "normat trade.
U.K. exports to China during the period January to December, 1966, showed a rise of 28,1 per cent on the previous year's figure. Sales for the period totalled £31,9m. compared with £24.9m. In 1965. In Dec- ember, 1966, the U.K. exported £3,063,494 worth of goods to China
In the
Imports in this country from China also rose-by 12 per cent--last year. January to December period they totalled £33.3m compared with £29.7m, a year earlier. During the month of December. 1966, the U.K. Imported goods to the value of £2,184,103 from China. Total two-trade during 1966 Increased by 20.3 per cent
P
:
1
P
D. TELEGRAPH Willy D-TIFL
50.
BRITISH EXPORTS /4/f Increase of 28 p.c.
1
18
23
But provisional figures released In London showed that trade be tween Britain and China had not suffered in 1966. British exports 21 to China in 1966 were estimated to be worth nearly £32 million. against just under £25 millon .a 1965, ad increase of 28 per cent. Imports from China increased by nearly 14 per cent., from £29.7m. to £33.8m. Despite de- partures from the Chinese Em- bassy in London, the commercial department is still operating as uspal.
25
* *
Pilots of the Nationalist Chinese Air Force operating from Formosa claimed to have shot down two Communist MIG-19 fer fighters 34 yesterday. It was the first air battle of the Chinese coast stace 1960.
Picture P16
A
4
+
GUAR..AN
Exports to Chine
in danger
By our own Reporter
Brit... industrialist, are keepe ing a close watch on reports of the troubles in China, feading that a new peak in nere exparis there economic reaction next youn
may
by
The trade faire, for love, at published yesterday by the Sine. British Trade Coline.
against a
"The of 28.1 per cent in Brush exports to China, to a latal of £31.9 millions. This worked rive in UMERIA GI 13.8 per cent, to leave. * Bap against us of £1.8 millions. greatly intproved British position.
The improVIS at was greatly assisted by
tracts for industrial plant com- pleted last year but stemming from the 11 exhibition in Peking. Win
fear is th...
and administer ki
102 the Dar2
Homestic
upheavals will prevent them from convalidating the gains.
Figures down
Same wit
wlow gospoda
Hongkong Wat Kunnah
1
to
of industrial mine has inter
to Hongkong by Cmt 12 days
1 of the yeah, when that one third
below the cGUNTAS ARMA, igures for 1963.
This might ke
4
to 24 PADA
indication that a weled strikes might be disrupting production, The trafic
In feedstuk and liver stock to the changed,
A
jcha
A
colony is bina
I
■
14-1-67
RECORD EXPORTS TO CERINA
B
RITAIN'S EXPORTS to Red China reached a record total of nearly 432 million last year-28 per cent up uk 1965. They beat the previous record in 1960 by a short head, IMPORTS from China last year were up by 13 per cent over 1965-to the 433.8 million mark.
+
+
+
MEMORANDUM
CONFIDENTIAL
SINO-BRITISH BRADS COUNCIL
OBETA
JAN 1937
Mr. George Brown granted me half-an-hour at the Foreign Office last week. Mr. Arthur de la Mare was also present.
I explained the set-up of the S.B.T.C. and gave some statistics of trend of trade over the last twelve months or so.
I said that, unfortunately, politics inter- fered in trade and this made our progress diffi- cult. I said that the Chinese regarded the "Wilson Government" as being unfriendly to them, owing to Britain's support of America in Vietnam and the attitude of such bodies as "The Times" and the B.B.C., who are regarded by the Chinese as official mouthpieces, and said the situation is further complicated by the COCOM Agreement and the Import Quota List.
Mr. Brown gave me a clear exposition of his own attitude to China which has been consistently friendly. In fact, he has spoken in favour of China becoming a member of United Nations, and he is actively trying to seek an end to the Vietnam War and felt that China had no justi- fication in their critical attitude.
I said that I had followed with much interest the public statements he had made about China. They had all been favourable, but I was merely reporting what the Chinese felt and said about us, and that, unfortunately, as long as the present Vietnam War and the Cold-War situation in the world persists and our relationship with America continues in its present close association, there is little hope that the political climate in Peking will improve for us. Meanwhile the French, and to some extent the West Germans, are well favoured and the Japanese take a large percentage of the trade. Mr. Brown asked why this should be and I explained that with the Japanese it was, in part, geographical proximity, and in part the fact that Japan was ready to take huge quantities of China's exports which were unsuited for our or European markets.
Mr.
Brown said that he had been looking at various suggestions for the betterment of our position with China and I sought his support for the publication of a Technical Journal in Chinese: he has the matter under consideration.
We then had a discussion on the present Cultural Revolution and it was agreed that the situation is very difficult to analyse and it is impossible to predict an outcome. He asked if I would suggest what would be the best solution given the present broad picture, the
-1-
-2-
personalities and the state of China's economy, and I said that we should hope for a situation in which the presence and spirit of Mao is preserved in China but that the administration of the country was left in the hands of Chow with his five ministerial colleagues. If this should be done at the expense of Liu and Teng, I doubted if the West would shed any tears for them. "Mao" will live for a hundred years; Liu, who does not appear very clever, can easily dis- appear.
Mr. Brown appeared to be very well briefed on many aspects of the situation. He said that he wished to take an increasing interest in developments in the Far East, and I think that from the $.B.T.C.'s point of view, the visit wes well worthwhile, and I hope that I can go again one of these days.
Juu Leide
ни
John Keswick.
16th January, 1967.
ли
Ps lattade an actide ju
New Tak Times Hammary 1322
Калиму which is, for my part, a fred exposition of the Cuia
a
frocan
de
+
ti
H
"
7.
The Struggle in China
Analysts Believe Mao and Lin Cannot Win in Their Fight to 'Reform' Party
By CHARLES MONIK
+
Jardiel je Tae New York Timet,
HONG KONG, Jan, 12-Most Many of the present opposi experienced analysts of Chinese) tion had agreed with Mr. Mac jaffairs believe that Mao Tse-but reality forced them to pull Lung and Defense Minister Lini back. It took China at least Piao cannot--in the long run three years toʻrecover from the -win their fight to "reform"¦ economie reverses of tha greșt the nation's Communist party leap, and to do so the nation had to be made less "Com- organization.
It is because their polley) munistic" than before the leap alme and goals are apparently began.
News
Analysin
30
Impractical, Private plots for farmera and even destruc-, small rural work teams, dif Live, that Mr. Mao¦ferential, wage scales on the and Mr. Lin will basis of axlila in industry and
of #tops
ideologica probably fail, such other analysts believe. Į backsliding were instituted and The present conflict in Com- even today, remain in foren, munist China has pitted a reja. [tively amali group headed by One factor which maker contr
'Concept of Self
promise so
difficult in the
Mr. Mao and Mr. Lin against
■ larger group of their old present struggle is the clarity comrades, including many prov" with which everyone can sel |inclal party bosses.
that Mr. Mao and Mr. Lis prob It is easier to understand the ably want to repeat the poilcisi nature of the struggle when of the past.
it is recalled that, while Mr. They themselves have defined Mao has always had the titis]thele "cultural revolution" al of Party Chairman, most of primarily almed at "eradicating the day-10-day control of party the concept of self" and thui and national affairs had been create a climate for an econom) wielded by others from late in which people work for love 1958 until the middle of last of the collective and not for year. Mr. Mao and Mr. Lin, "material incentives." are now trying to gain efface Another factor which maker Uve control.
compromise difficult is that li Many analysts think it is) is repugnant to the party, bou probably too late now for the personally and ideologically, t [struggle to be resolved by aḥaccept army officer Lin Piac lasting compromise, but few canțas the next head of the party yet take seriously the pos- Finally, the mysticism, ine sibility of armed civil wAT, tolerance and unreasonablenés To resolve the conflict in his of the Mao-Lin forces and or ¡favor Mr. Lin. Mr. Mao's heir|their Red Guard and "revolu- 'apparent, would probably havs|tionary redei" followers pose i to succeed in a widespread threat to a wide circis of faith. of provel purge of the nationwidą partyful Communists organization, replacing many!merit and to much of the gen present officials with army of-jeral population. ficern or young adherents,
Party Meeting
Analysts do not doubt that opposition is very strong and
If the other side wins, it win widespread. probably do so in a party Opposition Grows Larger meeting. In fact, many analysts The extraordinary admusslor think that if the full party, made by the pro-Mas preas the Central Committes could moet weck were accompanied by now, it would probably vola agentions that the Chines Mr. Mao and Mr. Lan down, masses and the "revolutionary" Although it probably would re-party members and bureau tain Mr. Mão as a figurehead|crats had seen through a ple to prevent further national and were uniting to amach it discord.
But the truth is that no on
The opposition to Mr. Mac, can be sure who is winning a and Mr. Lin is partly explain this poat
ed by events in 1958 when he However, one analyst remark 'decreed the "great leap for-led that every week the "Va ward," an attempt to speed up|ible members of the Mao-Db the transition to pure Com;faction seem to grow fewer am muniam and to "put polities in every week the Hạt of those ac Command" of China's econ-lgused of opposition grow
!
Farger.
+
(1120/67) CONFIDENTIAL
D. J. Moss, Esq., Far Eastern Department.
RECEIVED IN ARCHIVES No.31
1 8 JAN 1967
FC6/1
S
S
To su
Hou
KiKeswick's call
With the compliments of
COMMERCIAL SECTION
M.
E
Thi
(A. J. Hunter)
was laken inti
Conndratim in commenting
ما
T. THE VENICE OF
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Put on
OFFIC
Enter
THE BRITISH CHARGÉ D'AFFAIRS
ིས་ will
Wobb mcreane
PEKING
uary, 1967
aflect
The
10/1
вяза
M. Bla
202
أدنا
M. Bollard Just
wyers with
slo / British fade.
(1120/67)
CONFIDENTIAL
Office of the British
Charge d'Affaires,
PEKING.
4 January, 1967
A but wi 168
In another letter in this bag I am reporting the probable postponement of the Swedian and Swiss exhibitions which were to have been held in Faking this year, and a change of site for the Danish one, which is in any case likely to be held in very difficult circumstances.
2. This is only one element in a fairly considerable change for the worse which has come over the foreign trading picture here during the last few weeks, and which makes the prospects for trading activity in Peking in 1967 pretty bleak. There is still no evidence of any deliberate change in Chinese trading policy, nor indeed that the Cultural Revolution will in practice prevent the Chinese from continuing to trade with the "est according to their economic needs. But it is likely to be more difficult than ever for us to take the initiative in trying to maintain and increase our share of this trade.
3. It has become evident during the past week or two that the Cultural Revolution will not, as we had faint hopes it would, go into partial ibernation until the Spring; and that if things go as at present planned, the intensity of revolutionary activity will increase from A-ril onwards. Horeover the first important political document of the year - the New Year's Day editorial in the People's Sally lista as the first of the four ways in which the revolution is to be pursued during 1967 the extension of revolutionary activity into factories, mines and rural areas, which have hitherto been largely exempt from these distractions.
。
What effect will these developments have on trade? It is fairly obvious that despite what the New Year's Day editorial says to the contrary, any large scale extension of revolutionary activity to workers and peasanta is likely to affect production, and possibly foreign trade in ite turn. But even if it does happen, the effect of a fall in production on foreign trade will not be felt during the coring year. *
5. Neverthelers, although trade between China and other countries Bocna likely to continue at much the usual rate, all the aigne are that as much of it as possible will take place away from the political stora centre in Peking. Apart from anything else, the Chinese trading corporations in Peking are going to continue to have little time available for any but the most essential trading activity. Visas for British and other foreign business men to come here - or indeed to any cities in Chins outside Canton at Pair-tine are likely to be scarce: than ever. The fate of the Scandinavian exhibitions is evidence of this; so also is Ho Tung's
Dr. 1.8. Russell,
Commercial Relations & Exports De¬artment, BOARD OF TRADE,
CONFIDAN
DENTIAL
/remark
CONVI
·
rer to the Charge at a party last eck. Ho said he had had a mėsage from John Keswick through Y.0. Huang of Jardines aaking whether it sould be convenient for him to pay his post coned visit to Peking in Worch; but he (Ho) hud had to reply that. in the present situation it was really not possible for the C.C.P.I.7. or any other commercial organisation to vive visitors such sa Hr. Keasick the attention they deserved, and that the visit would therefore be best postponed indefinitely.
Sone foreign business aen till obviously succeed in reaching Peking during the coming year, and if they can meet Chinese require- aent, and Chinese price demans, with their products, their chances of doing business will be almost as good as ever. But those who come here for the purpose of "hard selling" or trade promotion whether individually or under the umbrella of exhibitions or trade missions - are unlikely to find it worth while to come to Teking this year even if visas are forthcoming. The trading corporations will have little time for them; and if the factories are really ging to be brought into the revolution, it will be more difficult even than it was during 1966 to make any form of contact with end-
users.
7. This is the picture as it nosears at the moment. One can always hope that the clouds will disperse, but it has not been sensible to count on this during 1,66 (as I am sure the vedish /mbassador would agree),
է
I
H I inve written this letter somewhat earlier than I might other- 1.Be have done, in the hope that you will be able to show it to "heo Petere and discuss it with hit before he leaves London to return here. hat I have said above may well affect one or two projecte or proposals which you have been considering with him. as thinking in particular of the proposal for an agricultural exhibition, whien Norman · ebb of
1.C. suggested in a letter to ...a recently was at resent being considered in London with none enthusiasm and urgency. I think and I know that the Churgh (who has seen his letter in draft) agrees - that it would be a
nate of fort to convider asking any proposals to the Chinese for sore northern at Teast either for this or any other exhibition.
r they allowed us to stage one in resent circumstances, it would
a flop burore it started. T o not even think that trade missions to "hina are a starter until the situation returna.a little nearer to nɔmal. e muct be prepared for the time being to accept the 11 ftation: hich the Chinese olitical situation imposes on our activity; to shelve, at least for a few months, any schemes for trade promotion here; and to be content to make the most of our tradin: effort t the Canton Fair and with Chinese missions to London, 23ich 1 here the Chinese trading officials themselves will find it less inconvenient and embarrassing to do business with us.
P
i copying this letter to Nose in the Foreign Office and Harhan at iong Kong.
vén
First
(A. J. Hunter) ecretary (Commercial)
COMET -KTIAL
(FAB).
FOREIGN OFFICE, S...1.
17 January, 1967.
(PC 6/1/8)
CONFIDENTIAL
Dop
nizli
水
In your despatch No. 4E of 1 February and in Peters' despatch No. 24E of 27 September, 1966, you suggested ways in which we might be able to expand our trade with China. We have drawn upon these despatches to prepare, with the cooperation of the Board of Trade and of Peters himself, a detailed paper on this subject. This has recently been submitted to the Secretary of State and you will be glad to hear that he has fully endorsed the various suggestions on ways in which we might be able to increase our trade which are contained in Part II. I enclose a copy of the paper together with copies of covering submissions by Eddie Bolland and myself.
2. I realise that the present unsettled situation rules out any immediate approach to the Chinese on the Sino-British Trade Council's proposal to publish a technical journal in Chinese or on the suggestion that we should hold an agricultural exhibition in China. I am, however, encouraging the Board of Trade to go ahead with the preliminary consideration of both proposals so that we shall be in a position to sound out the Chinese at fairly short notice when the situation eventually nettles down.
3. I enclose a copy of my letter to Mackahon at the Board of Frade. You will see from this that I have told him that I I doubt whether one of his officials would be able to have any worthwhile talks with the Chinese at the time of the Carton Spring Fair. As things stand it seems from here that it might be advisable to hold this idea over until the Autum
However,
if you nevertheless fcel that we should encourage a Spring visit there may still be time for us to go back to the Board of Trade.
4.
You will have received a copy of the record of John Keswick's call on the Secretary of State.
(A.J. de la Mare)
D.C. Hopson, Esq., C.M.G., D.S.O., M.C., T.D.,
PEKING.
CONFIDENTIAL
31009 22.
NOTHING TO BE WRITTEN IN THIS MARGIN
Registry No.
F26/1/8
DRAFT Letter
To:-
CONFIDENTIAL
9
Type 1 +
From
Top Secret. Secret.
Confidential DJM
Restricted 12/1
Unclassified
Mr. D. C. Hopson, C.M.G.
D.S.O., M.C., T.D.,
Peking.
Mr. de la Mare
Telephone No. & Ext.
Department
Flag D Flody E
Patus! despatch No
In your despatches Noe. LE of 1 February
245
and of 27 September, 1966, you suggested
ways in which we might be able to expand our
trade with China. We have w drawn upon/
these despatches to prepare, with the
co-operation of the Board of Trade and of
hymns of
Sir Peterà. a detailed paper on this subject.
This has recently been submitted to the
Secretary of State and you will be glad to
hear that he has fully endorsed the various
suggestions on ways in which we might be able
to increase our trade which are contained in
part IX. I enclose a copy of the paper
ворію
together with a-ebpy of Badije Bollandia.
covering submissions
Bi Eddie Bolland mow
mysuf
2. I fully realise that the present
unsettled situation rules out any immediate
approach to the Chinese on the Sino-British
Trade Council's proposal to publish a
technical journal in Chinese or on the
suggestion that we should hold an agricultural
exhibition in China,
however, encourag-
I am,
40
ing the Board of Trade to ppows ahead with the
preliminary consideration of both proposals so
that we shall be in a position to sound out the
the sillimi Chiness at fairly short notice when things -đô-
eventually settles down.
Ae you know, Je we
werk to allow the present bead of steam on
these ideas to dla down, it would take ages to
Soserruct them.
13.
3. I enclose
enclose a copy of my letter to
MacMahon at the Board of Trade. You will see
from this that I have told him that I k
eeme doubts en whether one of his officials
would be able to have any worthwhile talks with
the Chinese at the time of the Canton Spring
Fair. As things stand it seems from here
that it might be advisable to hold this idea
over until the Autumn. However, if you
nevertheless feel that we should encourage a
Spring visit there may still be time to go
back to the Board of Trade.
4.
You with have reccium
loom of the sewd of
Jorm Resnicho came in the
сти
Sevieren 1 Stark.
h
17/1
NOTHING TO BE WRITTEN IN THIS MARGIN
(FC 6/1/8)
CONFIDENTIAL
нар
(FLOK A TO
FOREIGN OPPICE, 8.V.1.
17 January 1967.
You will have seen a copy of the paper on Sino-British trade which we recently prepared with your Department's oooperation. I have submitted it to the Foreign Secretary and he has agreed that we may pursue with you the various suggestions contained in Part II (pages 9-13), which sets out ways in which we could increase trade with China.
2.
You can therefore count on our support for the three initiatives which we hope say some to something, namely:-
3.
(1) the Sino-British Trade Council's request for a subsidy from 8.1.G. to enable then to publish a technical journal in Chinese;
(11) the suggestion that a British agricultural
exhibition should be held in China; and
(111) Mr. Hopson's proposal that a Board of
Trade official should visit China to familiarise himself with the day-to-day problems of
trading with the Chinese.
I understand that you are already trying to find the funds which the Sino-British Trade Council require to publish their technical journal, and that John Keswick intends to broach this matter with the Chinese when he eventually obtains perzission to visit China (you will have seen a copy of the record of his talk with Er. Brown). There seems little else that we can do in the neantime.
This is certainly not a good time to ask the Chinese whether they would welcome a British agricultural exhibition. But I imagine that it will take some time to set up such proposal in London and to contact all those who might be
Interested in participating. I therefore hope that it will be possible for us to go ahead with taking preliminary soudings here in the hope that the situation in China will have settled down by the time we are ready to discuss the question with the
/Chinese
4.J. MacMahon, Esq., 0.3., C.E.G.,
Board of Trade,
8.7.1.
CONFIDENTIAL
CONFIDENTIAL
I see no reason why in more settled conditions the Chinese should not agree to such a proposal. Fere we on the other hand to let the whole scheme lapse because of the uncertainty of tɔe present situation it would no doubt take a good deal of time to resurrect and we might conceivably fall behind other nations who may be working on similar proposals.
5. By the same token, it now looks rather doubtful whether one of your officials would be able to have any worthwhile talks with the Chiness at the time of the Canton Spring Fair. I am consulting Donald Hopson separately on this. Subject to his views, I suggest we might hold this idea over until the Autum Fair.
6.
I am sending a copy of this letter to Donald Hopson.
(A.J. de la Haro)
CONFIDENTIAL
NOTHING TO BE WRITTEN IN THIS MARGIN
Registry No.
FC6/1/2 DRAFT
letter
To:-
Esq..
G.J.MacMahon,/C.B.,
Top Secret. Secret
Confidential.
Restricted.
Uschelled.
C.M.G.
Board of Trade
Type 1 +
From
Mr. de la Mare
Telephone No. & Ext.
Department
a
10
Copy to:
D.C.Hopson, Esq., C.M.G., D.S.O.,
M.C., T.D.
Peking
Flag B
Alen
'You will already have received a copy of
the paper on Sino-British trade which we recently
prepared with your Department's co-operation.
it
I have new submitted this paper to the Foreign
Secretary and I am glad to be able to tell you
that he he agreed that we may pursue with you
the various\suggestions contained in Part IX
(pages 9-13), which sets out ways in which we
could increase trade with China.
2.
You can therefore certainly count on our
support for the three initiatives which we hope
may come to something, namely:-
(1) the Sino-British Trade Council's request
for a subsidy from A.M.G. to enable them to
publish a technical journal in Chinese;
(ii) the suggestion that a British agricultural
exhibition should be held in China; And
(111) Mr. Hopson's proposal that a Board of
Trade official should visit China to famili-
arise himself with the day-to-day problems
of trading with the Chinese.
3. I understand that you are already trying to
find the funds which the Sino-British Trade
Council require to publish their technical
journal, and that John Keswick intende to broach
this matter with the Chinese when he eventually
obtains permission to visit China (you will have
seen a copy of the record of his talk with
Mr. Brown). There seems little else that we
/can
can do in the meantime.
This is certainly not a good time to ask the
Chinese whether they would welcome a British
agricultural exhibition.
But I imagine
that
it will take some time to set up such a proposal
to contact all those who might
in London
be interested in participating.
I therefore
hope that it will be possible for us to go
Spa
ahead with the preliminary arrangements here
in the hope that the situation in Chine will
have settled down by the time we are ready to di
discuss the question with the Chinese.
I see
no reason why in more settled conditions the
Chinese should not agree to such a proposal.
Were we on the other hand to let the whole
scheme lapse because of the uncertainty of the
present situationg it would no doubt take a
good deal of time to resurrect and we might
conceivably fall behing other nations who may
be working on similar proposals.
I hope that
you will therefore fiel able to begin
exploring the idea with the intention of Consulting the Chinese with a suitable
opportunity arises.
5. By the same token, it now looks rather
doubtful whether one of your officials would be
able to have any worthwhile talks with the
Chinese at the time of the Canton Spring Fair.
I am consulting Donald Hopson separately on
this.
Subject to his views we right hold this
idea over until the Autumn Fair.
6. I am sending a copy of this letter to
Donald Hopson.
h
17/1
NOTHING TO BE WRITTEN IN THIS MARGIN
KRUTHIOTED
Private Secret:ry
9
Cartached Салка
on Fing B]
1
CALL ON THE SECRETARY OF STATE BY MA. JU'N KESWICK
Y
ON WEDNESDAY, 11 JANUARY, AD 3.45 F.M.
7. Keswick is Fresident of Me Sho-British Trade Council
and & Director of the importent Hong Kong fin af Jasolans
Katheson.
He
lived in China for many years before 1949 and
knows & rest deal about Chins.in general as well as bout the
China trade. Besides telking about trade, the Secretary of
State might, therefore, like to rak hin what he thinks of recent
events in Cina.
Sinu-ritish Trade
A detailed paper on Sino-British trade iwa alieady been
Bubritted separ-tely by Er. de la Mere in his minute of 3 January.
ida e'ows thel, although our trade with Cina de s-l1 (exporta
about £25 rillion a year, representing only 0.5% of our total
Jexport truña), there is room for some incrense if British
busingsaren really work hard at promoting trude.
However,
within the foreseeable future, this is unlikely to be
spectacular. The positive steps we could take to increase
our trade with Cins "re sat out in Section IX of the "etailed
paper.
3. Kr. Keavick in well aware of the reasons why the "political
obstacles" to trade no constantly referred to by the C insge
cannot easily be rarovad, and the Sino-British Trade Council
is thoroughly responsible as regarde te application of the
strategic embargo, which is a KATO agreement covering -11
Communiul countrise. The other rain "politic-1 obstacle" to
trede is that there are one pulitionlly Lensitive items
RESTRICT D
Me.x.
:
RESTRICTED
L
(e.g. large aircraft) which we are unwilling at the moment to
sull to the Chinese because of American reactions and the
effect that these would have on our trade with the United States.
We try to interpret the enbargo regulations e liberally as
possible and to restrict the export of other goods only when
their sole would lead to a major row with the Aericans.
We have, for instance (es Br. Keswick will know), recently
licensed the export of a fairly advanced computer
503
5.
-
despite some American pressure not to do so.
-
the Elliott
Our general political differences with the Chinese do not
seem to have much effect on our trade. In practice the
Chinese tend to separate trude from politica: their trade with
Japan (which has no diplomatic relations with C) inu) is far
greater than with us and that with West Germany (which also has
no diplom tic relations) almost as great. We cannot be sure,
however, if we were to adopt a policy Peking regarded as
a threat to her basic interests (e.g. recognising Formose), the
Chinese would not take action against our trade with them.
5. The Cultural Revolution movement, at present causing so
much turmoil in China, does not ppear to fave affected Chinese
trade policy, although it has certainly had an effect on the way
this policy is carried out. Ministries in China are now so
preoccupied with the pursuit of "bourgeois devils" that they
heve little time for seeing "oreign businessmen. The result of
this is likely to be that our trade with China this year will
be less then last, but the adverse effect of the Cultural
Revolution on our trade rel-tion is unlikely to be pertanent.
BSiland
6
jaque mich Mr de la Dan u
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Proposals in his minuti
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CONFIDENTIAL
hind Chalfant C 43 (see my note below)
LORD WALSTON O.F. SELL
SECRETARY OF STATE
word
?
I think myself that the moral of this is that there
will always be an element of political decision in the
allocation by a Communist country of major orders.
Sometimes, something that is wanted can only be obtained
from a particular country, in which case the Communist
orderer has no choice. But where there is a choice,
there will be a marginal element of political manoeuvre
in the sense that a Communist Government may seek either
to please or to give a heavy adverse hint to a particular
Western or non-aligned country, depending on the state
of the international political game.
2. Where there is no such stake in a particular
contract, I agree that the ordinary econom ground
above, I think
modifications apply. Against the abov
that we shall remain up against a particular difficulty
in the light of our relatively intimate relations with
the United States, and also our problems with, e.g. the
more extreme African countries, whom the Chinese will
seek to encourage. But we shall have some advantages,
e.g. when we produce goods that are particularly needed,
though they may tend sometimes to be embarrassing (e.g.
/computers)
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ลง
2
our
computers) and there is no excuse for/being slack
about trying.
for/being slack
Plimson
(P. H. Gore-Booth)
5 January. 1967
I agree with Su P. Gue. Booth
the argument that
+
Shoned be wary
of building up own trade with China
because we may one day lose it again
be carred two fax. So long
as
the Cocom requirements are #actioch
босон
met
Land Mr de la Mare's paper takes
full account of them) I believe
Sured
we
ço aboad
af proposed, and
You
should authorice
I recommend that
the Department to act 1 suggested in
paragraph 8 of Me de la Mare's note. Валадарв
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*/*.
Zagh
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ival (7)
17
Permanent Under Secretary
Haj A
TRADE WITH CHINA
I recently asked Far Eastern Department to prepare, in
cooperation with the Board of Trade, an assessment of our
trade with China and its prospects. I now attach their
paper.
2. The Secretary of State has mentioned to me his interest
in the promotion of this trade. He may not wish to read the
paper in full but I would invite his attention to Section IX
Ipages 9-13) which sets out the various things we could do or
are doing.
3. Our exports to China, at roughly £25 million per annum,
represent only 0.5% of our total exports. The question arises
whether the game is worth the candle, and whether in any case
it is wise to try to expand our trade in the face of the
possibility that our political relations with China may
deteriorate.
The
4. Given the theoretical potential, £25 million per annum is
pitifully small, but £25 million is still £25 million.
balance of trade is at present in China's favour her exports
-
France, Italy,
to us are running at 230 million per annum. But it does not
follow either that the balance will continue in China's favour
or even that she will try to insist on this.
West Germany and Japan all export more to her than they import
from her. Of these only France is in diplomatic relations
with her. China is thus at least to some extent putting into
/practice
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practice her own dictum that trade is divorced from politics.
The point for us to note is that generally speaking she will
import most from those who provide the goods she wants at the
price she is prepared to pay. As the paper points out,
Japan has the advantage over us in that she can supply more
easily than we can some of the goods which China most needs,
but West Germany has no particular advantage over us in that
respect; yet, although she imports less than we do, her exports
to China exceed ours by almost £4 million a year.
5. There seems therefore to be no fundamental reason why
our exports should not expand if we are prepared to work for
them. But if we assume, as we must, that China may not always
divorce trade from politics if she considers the political
issues sufficiently grave, we must admit that we might be more
vulnerable then some of our competitors.
Though there is no
sign of this at present, political issues involving Hong Kong might arise which could adversely affect our trade with China.
We have too so far been spared having to take a clear-cut
decision on Formosa (at present we merely say that its status is undetermined) but we may before long have to stand up and
be counted. Unless our stand were taken solely on expediency
it would hardly be palatable to Peking. Others, especially
the Japanese, might be faced with the same dilemma, but
although there is no reason to suppose that they would handle
it more skillfully than we, it is possible that we would incur
more Chinese resentment than they. There is no logical reason
for this: it is simply that in that part of the world, as in
/others
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others, people still derive considerable satisfaction from
venting their indignation on the British.
6. This might be thought to point to the need for our being
cautious in developing our trade with China lest we get stuck
with a larger commercial stake than we would like in the event
of political trouble. But I suggest that this would be an
unnecessarily timid and pessimistic attitude. There is no
reason to take it as axiomatic that our relations with China
must deteriorate.
Indeed they may improve.
Admittedly I
see no prospect of this now, but the course of our relations
over the last year with Indonesia has shown how rapidly and
unexpectedly situations can change, for the better as well as
for the worse. The current internal turmoil in China nay
strengthen the present rigid xenophobic regime in Peking
but it may also weaken it and lead to a movement for greater
accommodation with the rest of the world.
7. One point which is common ground to all of us is that we
should not press our trade with China in cases where to do so
It would adversely affect our trade with the United States. would be madness to jeppardise a good existing market in favour
of what may turn out to be a will-o'-the-wisp. But here again
The Americans will we should not exaggerate our difficulties.
not always react as violently as we sometimes tend to suppose.
When, some ten years ago, we abolished the "differential" (the special COCOM list embargoed for China only, not the
rest of the communist bloo) there were those here who foresaw
But in the most dire results on our relations with the U.S.
for
A
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/fact
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Hy A
ACTION HERE
fact there was no adverse reaction at all and indeed we
-
were privately congratulated by members of the United States
Administration for having had the courage of our convictions.
More recently the American reaction to our wish to sell a
computor to China has been extremely mild.
8.
It
Section IX of the paper (pages 9-13) sets out various ways
in which we could increase trade. Taken piecemeal these
suggestions may not appear to amount to much. But taken
together they could amount to something very useful.
would be helpful if the Secretary of State would authorise me
to tell the Board of Trade that we have his sanction for
pursuing these suggestions with them to the full extent of
feasibility.
9. Mr. John Keswick of Matheson and Company is to discuss
the China trade with the Secretary of State on 9 January.
A brief will be submitted at the time, but meanwhile the
Secretary of State might like to see the paper, especially
Section IX.
WA. de la man.
(A.J. de la Mare)
3 January, 1966
Copies to: Mr. Bolland
Head of E.R.D.
CONFIDENTIAL
TELEPHONE.
MANSION HOUSE $555.
TELEGRAPHIC ADORESSEN-
INLAND: MATHESONS TELER LONDON FOREIGN. MATHESONS LONDON-EC 3
TELEX KERVICE 2-2100
with-18
8
· Matheson & Co. Limited,
3 Lombard Street,
Arefiductial. London, E.C.3
Dear by theur.
22nd December, 1966.
I think I told you that I was planning a trip to China. I have now heard a little bit about the prospects and I enclose a copy of
a letter which I have written to Mr. MacMahon at the Board of Trade, which sets out the position.
The Chinese are rather more open than usual in saying that politics are the key to the situation, so I thought you would be interested.
I have not had the opportunity of discussing China with the Secretary of State and I would like to ask if he could spare me half-an-hour on the subject of China. As you know, I am President of the Sino-British Trade Council and am always anxious to promote exports to China (October £4 million was a record), but, unfortunately, the political considerations often interfere with our efforts.
Tuss. nicerely.
dhuk
John Keswick.
A.J. de la Mare Esq., C.M.G.,
Foreign Office,
Downing Street,
LONDON, S.W.1.
Enclosure
COLADENTIAL
Dear MacMahon,
22nd December, 1966.
L
CHINA
I had originally intended to make a trip to Peking in October of this year, but the Council for the Promotion of International Trade, in the person of Mr. Hou Ton, sent me a cable suggesting that the time was not entirely convenient and that they would prefer that I postponed it until a date which suited everyone.
A month ago I wrote to Mr. Hou Ton asking if next March or April would be a suitable date for a visit and I followed this up with my own repre- sentative, Y.C. Huang, to call on him to enquire about the position. I now have a message from T.C. Huang, which reads as follows 1-
"Have discussed with 0.0.P.I.T. this morning they have received J.K.'s letter
(*)
they welcone J.K.'s visit but
they are unable to fix the time now because (1) 0.0.P.I.T. and the different foreign trade organisations are very busy until next Spring (stop) To ensure the success of the visit and of the discussions during the visit, it is necessary to have consultations with the senior staff of the foreign trade organisations beforehand (2) The political atmosphere between Great Britain and China has important bearing on the visit and they have to see the condition prevailing next Spring (C) Regarding emall size exhibition, this depends on the time of the exhibition, the types of exhibits to be displayed at the exhibition and the opinions of the foreign trade organisations of the end- users and of the organisations sending visitors to the exhibition (D) Concerning Sino-British trade there is development this year, but the "
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Than 6755
with
Mi Keswick is
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with apart from
China
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22nd December, 1966.
(Message from 1.0. Huang continued)
"future hinges on the changes of the political atmosphere (E) they thank J.K. for the
assistance extended to and arrangement made for the business delegations visiting Great Britain (F) they send their regards to Mrs. Keswick (1) Hou Tung will advise by letter when is the suitable time for J.K.'s visit to Peking.
This answer is neither one thing nor the other, but I thought you would be interested in it, par- ticularly as the Chinese have come out in the open much more than usual, emphasizing that the political atmosphere seems to dominate the picture!
I usually keep the President informed about these sort of problems and should be obliged if you would pass on the message to him and ask if he would spare pe a few moments after the New Year.
As there seems to be a fairly strong political theme running through this situation, I am writing similarly to Arthur de la Mare at the Foreign Office.
Yours sincerely,
(Signed) JOHN KESWICK,
John Keswick.
G.J. MacMahon Esq., 0.B., O.M.G., I.Do.,
Board of Trade,
Commercial Relations and Exports Department, 1 Victoria Street,
LONDON, 8.W.1.
RESTRICTED
g
Reference
Private Secretary
The attached letter from Mr. John Keswick of Matheson and Co. Limited, who is President of the Sino-British Trade Council, asks whether it would be possible for him to see the Secretary of State to discuss China. Mr. Keswick hopes to visit China in the Spring though presumably because of the political uncertainty there the Chinese have not yet named a date. We think that it would be useful if the Secretary of State could spare the time to see Kr. Keswick some time before the visit. Would it be in order if we replied saying that the Secretary of State was at present extremely busy but would hope to see Mr. Keswick at some time before his visit to China?
2. If this is agreed,we should like to show the Secretary of State a Paper prepared in the Department on Trade with China before Mr. Keswick calls.
John Denson
(J. B. DENSCN) 29 December, 1966
Hi Keswick
пі декой
I han arranged
RESTRICTED
to call at 4.45 a
for
Malay
CONFIDENTIAL
Mr. de la Mare
71
Flag B
SINO-BRITISH TRADE
The Secretary of State has endorsed the various suggestions
on ways in which we might be able to increase our trade with
China contained in Part II of the detailed paper.
The way
is now open for us to inform the Board of Trade that we have
the Secretary of State's authority to pursue these proposals
Flag C with them (paragraph 8 of your submission of 3 January).
I submit a draft letter to Mr. MacMahon. You will see
I have suggested that, although we should certainly press
ahead in London with our consideration of the various
proposals, the present unsettled situation in China rules out
any immediate discussions on these points with the Chinese.
I also submit a short letter to Mr. Hopson.
2.
3.
E.R.D. concur.
balland
(E. Bolland)
16 January, 1967
Letters to issue.
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17/1
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br. e la re
poporo
with G
TRADE WITH CHINA
I attach a paper on our trade with China, prepared in
co-operation with the Board of Trade and the Commercial
Counsellor from our Mission in Peking. It describes China's
current and likely future requirements, our present trade with
her end our future prospects in the market, obstacles to trade
between the two countries and ways in which H.M.G. is already
helping or could in future help to increase such trade.
Present Trade and Prospects
2. As the peper makes clear, Britain's trade with China is not
large and cannot easily nor soon be made much larger. Our total
trade both ways in 1965 was some £54 million; China is our
thirty-fifth largest customer and takes only 0.5% of our exports.
We cannot profit, as do Canada and Australia, from China's vast
grain requirements, nor have we Japan's advantage of geographical
proximity nor her markets for China's primary products.
For her
pert, China has strictly limited end pre-empted amounts of
foreign exchange and she also pursues a policy of not making
herself dependent on a single supplier. Nor does she import
consumer gooda. Nevertheless, there are possibilities for
increased British trade.
China hes now almost fully recovered
from the economic crises of 1959-62 and her economy is steadily
As trade with the Soviet Union continues to fall,
expanding.
an increasingly larger share is left for non-Communist countries.
It is too early to say whether the Cultural Revolution will slow
down China's economic recovery: it may well interrupt it, but
the leadership is aware of this problem and have taken steps to
limit any harmful effects internal political developments may
have on production and trade. The latest figures suggest that
/it is
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it is now possible thot our total trade both ways for this year
ay exceed £60 million.
Tht Can We Do?
3. What then can we do to ensure that Britain obtains the
largest possible share in this trade? As Section VII of the
paper shows, there are some formidable obstacles.
Political Considerations
4.
Leaving oside China's unique relations with the Soviet Union,
political considerations do not seem to have a decisive effect
on China's commercial relations with other countries. Neither
Japan, Test Germany, Canada nor Australia have diplomatic
relations with China, yet their trade exponds rapidly for sound
commercial reasons. On the other hand, France provides China
with valuable diplomatic support and yet she seems to have gained
no clearly identifiable commercial benefit from this. West
Germen exports to Chin greetly exceed those of France. There is
little reason therefore to think that the present relatively
poor state of our political relations with C ina is hering our
trade or that an effort to improve these relations would bring
any aubat ntial commercial return. Thus were we, for example,
to meet China's pre-conditions for putting our relations on a more
friendly footing (i.e. withdrawing our support of United States
policies in Vietnam, recognising China's 'clain to Formosa nd
working more actively to seat her in the United Nations), we
would not thereby necessarily acquire an open sesame to China's
markets. We cannot, however, be cue that if, on the other hand,
we were to adopt a policy regarded by Peking as a threat to her
/basic
CONNI HANTUAL
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basic interests (e... were we to recognise a separate
Government of Formosa or perhaps even pursue a "two Chinas"
policy), the Chinese would not seek to "punish." us by cutting
back the imports of British goods or denying us a particularly
valuable contract.
Obstacles to Increased Trade
5. As for the obstacles to our trade set out in Section VII,
there seems to be little we can do at present to overcome them.
The following present the most difficulty:
(a) The Strategic Enbarzo: In CCCOM, in which decisions heve
to be unanimous, the Americans would not at present agrea
to any relaxetion of the strategic embargo es applied to
Cina. They might be willing to agree to some
relaxations of the embargo for destinations in Eastern
Europe at the next CGCOM List Review due at the end of
1967. It seems at present unlikely that they would
agree to relaxations on he scale we would consider
justified unless some provisions overt or covert were
made for rataining control for destinations in Cì ina,
i.e. some form of Ching differential were re-introduced.
But we have consistently opposed separate treatment of
China in the past and should, we think, continue to do so.
(b) Non-embargoed but Sensitive Gouda: While the Vietnam war
continues, the Americans will press us not to sell to
the Chinese even non-embargoed products (such na civil
aircraft) which would add to Peking's military potential.
They will certainly also do their best to ensure that
United
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United States component parts or parts involving United
States "know-how" do not find their way to China