incorporated in British goods. There will also be
opposition from India to the sale of aircraft to China.
As far as aircraft are concerned, this problem is nt
present under r-view by the Departments concerned and it
is hoped that we sell be nhle to give the ircraft
industry guidance on the types of aircraft which may be
exported to China:
(c) I port Quotas: It would be virtually impossible for the
Board of Trade to single out China for more liberal import
quotas. Other countries would soon hear of this and
would press us in their turn for similar concessions.
Irmediate Action
They
6. The positive atepe we could like to increase our trade with
China are set out in Section IX of the attached paper.
are not at all framatic and mostly involve strengthening "nd
improving existing facilities. There are, however, at least
three useful initintives which I think we can support:
(a) the Sino-British Trade Council's proposal to publish
a technical journal in Chinese for distribution to
Chinese trade officials •nd specialists. This proposal
is now being studied by the Board of Trade and may well
require - subsidy from H.H.G. of £2,000 in the first year
and 21,200 a year thereafter. (paragraph 17(c));
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? Mi Mulley
(b)
(c)
our Mission's suggestion that a British: agricultural
exhibition should be held in Chine (peragraph 17(a)).
Kr. John Keswick hes alieady promised to camp, ign
actively for this if H.M.G. agree to support it. Lord
Walston might like to discuss this suggestion with
a Minister in the Board of Trade;
our Mission's recommendation that a Board of Trade official
should visit China to far ilierise himself with the day-to-
day problems of trading with the Chinese (peragraph 17(e)).
The officiel could conveniently visit Cine at the time
of the Canton Feir next spring.
I should so note that our prevent Cor mercial Counsellor in
Mr Peters
Peking is now visiting a number of British firms and Chambers of
A
Commerce to discuss with them, nd deliver lectures on, our trade
with Chine. A highlight was Mr.
Peters' talk to over 200
representativee of the China trade at the Confederation of British
Industries' headquarters in London on 17 November.
Reducing Chine's Isolution
7. The justification for doing what we can to increase our
trade with China is of course primarily commercial.
There is
lao, Lowever, a political factor to bear in mind. It was agreed
in the Steerin. Committee paper dealing ith possible measures to
break down Chinese isolation that trade was one of the very few
ways in which Britain could help to bring China more into contact
with the Western world. The visits of British businesmen to
China "nd of Cinese trade officials to Britain right eventually
/contribute
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contribute to lessening the present extremism of Chinese policies.
We should therefore, the paper concluded, do everything we could
This is clearly not a factor
to encourage such trade contacts.
of immediate consequence, but it does provide another reason for
increasing our efforts to promote Chinese trade.
8.
Economic Relations Departrent concur.
Copy to br. Mason, E.R.D.
+
Bolland
(E. Bollend)
19 December, 1966
Suntrusion to P.US.
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3/1
T.
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TRADE WITH CHINA
China's present trade (peragraphs 1-2)
With Britain (paragraph 1)
In general (paragraph 2)
China's current requirements (paragraph 3)
RECEIVED IN
ARCHIVES No.317
1 8 JAN 1967
FCG/1
II.
III.
British Exports to China (paragraph 4)
IV.
V.
VI.
VII.
Future trends (paragraphs 5-6)
Prospects for British Trade (paragraphs 7-8)
Credit (paragraph 9)
Hindrances to Trade (paragraphs 10-14)
Strategic Embargo (the COCOM list paragraph 10)
British quota restrictions (paragraph 11)
Political difficulties (paragraph 12)
United States components and "know-how"
(paragraph 13)
The Travel Notification System (paragraph 14)
VIII. Trade Promotion (paragraphs 15-16)
IX.
British Organisations (paragraph 15)
(a) The Sino-British Trade Council
(b) The "48 Group".
The Mission in Peking (paragraph 16)
Ways in which Her Majesty's Governmcnt could help increrse Trade (peragraph 17)
(a) British exhibitions in China
(b) Red carpet treatment for Chinese purchasing missions
(c) Strengthening the S.B.T.C.
(a) Visits by Commercial Officers to firms in Britain (e) Visits by Board of Trade officials to China
(f) Educating British businessmen
(g) Training Chinese technicians in the United Kingdom
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Appendix A:
(h) Chinese exhibitions in the United Kingdom.
Chinese foreign trade with the U.S.S.R., the rest of the bloc and with non-bloc countries 1960-65.
Chinese trade with Britain, Japan, France and West
Germany, 1960-65.
Appendix B:
Appendix C:
Chinese trade with selected countries by
commodities, 1964 and 1965.
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TRADE WITH CHINA
I.
CHINA'S PRESENT TRADE
British exports to China in 1965 amounted to £24.8 million
and total trade both ways to £54.5 million.
For the first ten
months of 1966, British exports amounted to nearly £26 million
a better annual rate than
and total trade to £54.6 million 1965. Both sets of figures represent a considerable improvement over 1964. China is our 35th largest customer, taking 0.5%
It is unlikely that this position will
of our total exports.
alter substantially in the coming decade.
2.
In recent years the most significant change in China's trading pattern has been the decline in trade with the Soviet Union and with the Soviet bloc as a whole.
During the
fifties, over two-thirds of China's trade was with the bloc,
now the figure is less than one-third (see Appendix A). Although Britain has shared in the general increase of trade with China, the improvement in our trade has been slow.
China's
trade with Japan has increased at a far greater rate and in
1965, although we remained the largest Western European importer of Chinese goods, our exports to China were overtaken by those of West Germany (see Appendix B).
II. CHINA'S CURRENT REQUIREMENTS
3. Since 1961, China has been buying an average of 5a million Even if China's harvests continue to tons of grain per year. improve, they are not likely to do more than keep pace with her increasing population and purchases on this scale are likely to continue. It is estimated that China will spend £600-700
million on grain during the next five years.
Britain cannot
share in this trade except in the chartering of ships.
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/Although
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2.
Although the Chinese have purchased substantial quantities of certain raw metals on the London metal market (and will probably continue to do so if the prices are right), we can only share indirectly in the increased Chinese demand for raw
Chemical fertilizer, for which there is a great
materiels. demand, is being supplied largely by Japan, although I.C.I. is trying to break into the market. We are more likely to benefit from the Chinese desire to import metal products, engineering goods, scientific instruments and complete plant, although it is likely that some of the plants which the Chinese "re now purchasing will be used as pilot projects which the Chinese can
The Chinese are also increasingly trying to buy "know-how" (plus a minimum of essential equipment) rather than
They do not import consumer goods. complete capital projects.
then copy
III. BRITISH EXPORTS TO CHINA
4. The table at Appendix C gives the main categories of
The main exports British exports to China during 1964 and 1965. were machinery of all kinds, non-ferrous metals, iron and steel, scientific goods, textiles and chemicals.
Our best chances
of exporting are likely to remain in these fields.
IV.
FUTURE TRENDS
5.
Future trends in Chinese foreign trade are very difficult to foresee. It is too early yet to determine what effecta the Cultural Revolution will have on China's economy end commerce. The slowing down in foreign trade negotiations in recent montha may well be one of the first results of the disturbances caused by the Cultural Revolution.
Production,
and hence export earnings capacity, may also have suffered for
/the same
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3.
the same reason.
Care has, however, been taken to limit the
repercussions of these political developments on the economy and any such setback to Chinese trade and production need only be
short lived.
6.
There is little firm information available about China's economy and the Third Five Year Plan which is due to begin this year. It seems, however, that realistic policies are being followed, such as giving priority to agriculture and not again getting involved in another "Great Leap Forward" similar to that of 1958 with its disastrous dissipation of China's limited resources. If these policies are continued, China's economy should show a general improvement without the great peaks and troughs of the "Great Leap Forward" and her foreign trade is likely to keep pace. However the improvement is not likely to be rapid and for many years to come the stability and growth of China's economy will continue to depend on a sound agricultural base. One year of bad harvests could at any time cause a major setback. The consequent diversion of foreign exchange to the purchase of foodstuffs from overseas would necessarily have an impact on China's importa of industriel and other goods.
PROSPECTS FOR BRITISH TRADE
V.
7.
Since the decline of China's trade with the Soviet Union it has become clear that she no longer wishes to be dependent upon any one country and she will therefore strive as far as possible to maintain a reasonable balance between her foreign suppliers. Within this limit, to what extent the British can share in Chinese trade will depend very largely on the capacity of our manufacturers to produce goods of the right
-
generally
/the highest
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the highest
-
quality at competitive prices and to deliver them on time. The Chinese are shrewd commercial negotiators and carcfully assess alternative sources of supply before placing large contracts. They are unlikely to allow the recent strains in Anglo-Chinese relations to affect the purchasing policy of their trading corporations. Their main concern is with the
price and technical qualities of the product in question and reliability of delivery. Although at present our exporters have the advantage of a complete absence of United States competition, it will not be easy to maintain our prosent share of the market, let alone to increase it. The Japanese, by virtue of geography, past trade links and the fact that they are very large purchasers of primary products from China, have many advantages, and our European rivals are all striving to increase their own
shares of the market.
8.
Although it does not seem that China tries to balance her books with each individual country exactly, the level of our exports will to some extent depend on how much we are prepared to buy. This could become a problem for all China's Western suppliers. There is a steady demand for Chinese agricultural and mineral products but hardly any for her industrial goods: noither quality nor sales technique boing as yet up to Western requirements. The Chinese might, however, be able to increase their exports of consumer goods to a significant extent. in general, while the bulk of her exports consist of agricultural products and there remain only limited surpluses available for exporting to the West, then there will be
a similar limit to her capacity to import.
But,
Even if China ever
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/hea
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5.
has a large surplus for export, Western agricultural
protectionism would probably impose a limit to the amount sales
can be expanded.
VI.
9.
CREDIT
E.C.G.D.
The Chinese record of payments is excellent. cover is available for China without any special limitations. Financial Guarantees for long-term credit re in principle available, but have never been asked for.
Even where five-year
credit terms have been agreed (e.g. for the sale of six Viscount aircraft) payment has been completed before the end of the five
year term.
VII
HINDRANCES TO TRADE
10. Strategic Embargo Together with other NATO countries and Japan, Britain embargoss the sale to China (and the Soviet bloc) of all gooda and equipment regarded as strategic (the
COCOM list).
China frequently complains about the existence of the embargo and enquiries are often made about buying items on the list. There can be no doubt that the cmbargo prevents China from buying Western equipment which would help with her nuclear and military programme. It may also prevent the purchase of equipment which is genuinely intended for civil use, although the amount of trade prevented in this way may not be as great as the Chinese claim.
China firmly believes that the
COCCM list is applied with more stringency to her than to the Soviet bloc, but this is not altogether true,
There used to be
a "Chine Differential", but it was abolished in 1957 at our insistence and, despite recent American pressure for its revival in a modified form, COCOM does not discriminate between China
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and Eastern Europe.
6.
Nevertheless, exception cases are less
likely to receive COCOM approval for destinations in China than similar ones for Eastern Europe, because United States concurrence is needed. In cases when H.M.G. havo discretion to authorise administrative exceptions to the embargo, it is often harder to satisfy conditions about end-use in China than it is for
It is Eastern Europe; this is notably true of computers.
The cotton
sometimes alleged that our own conscientious application of the COCOM rules diverts Chinese orders to other countries which apply them less rigorously, but there is no conclusive proof of this. 11. British Quota Restrictions About 80% of British imports from China consist of such things as sheep and lambs wool, animal hair, bristle, soya beans and various oils (see Appendix C). All these goods are freely licensed up to the full value requested. Other goods are subject to quota restrictions. textile quota (which is imposed as part of a world-wide scheme of control) probably prevents some Chinese imports, but Board of Trade policy on other products is to be as liberal as possible and the quotas are in general more of an irritant than a serious impediment to trade. Despite this, the Chinese consider all quotas "illegal" and have refused to negotiate about them. 12. Political Difficulties The export of almost all "sensitive" goods falls within the scope of the COCOM embargo. There are, however, some items which do not appear on this list, Aircraft but the export of which causes particular difficulty.
are the prime oxample. Earlier this year there was a fair possibility that the Chinese would order a number of Trident aircraft from Hawker Siddeley. Despite the obvious attractions
/of this
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7.
of this deal, Ministers decided that at the moment such a sale would cause unacceptable repercussions on our economic and political relations with the United States and our political relations with India. While the Vietnam war remains at its present intensity and American backing remains so important for sterling, similar arguments are likely to be used to prevent the
The disadvantage sale to China of other such sensitive items.
of such a unilateral embargo is that we leave the way open to our competitors who are less dependent on American support; France
in particular.
It is unlikely that much can be done to improve
this general situation at the moment. We are et present, however, engaged in an inter-Departmental review of our whole policy on exporting aircraft to China, as a result of which it is hoped to give the aircraft industry guidance on the types of aircraft which may be exported to China and those which may not. Our general policy is to ensure that embargoes should be as limited as possible but applied equally by all COCOM countries. 13. United States Component Parts and "Know-how" trade controls prohibit the export to China of any United States' goods. Many British products of advanced design incorporate American component parts or "know-how". Some firms without important
trading
connections in the United States export these items and
risk the consequences of American displeasure.
United States
Most firms,
however, are forced to find alternative components or not to trade
There is no prospect of a change in the American
with Chine.
attitude in this matter in the near future.
The Chinese
attribute the difficulties over exporting products incorporating United States "know-how" to the direct intervention of Her
Majesty's Government, and often complain about "such artificial
barriers to trade".
/14.
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8.
The Chinese Mission in
London periodically complain about this system which requires all Chincse who have been in the United Kingdom for longer than
14. The Travel Notification Schome
three months to give the Foreign Office 48 hours' notice of any plans to travel outside London. In practice, permission is very rarely refused and the system is much less restrictive than the stringent travel regulations imposed upon foreigners in Peking. We have told the Chinese that we would willingly abandon our
system if they will reciprocate.
VIII. TRADE PROMOTION
15. There are two British organisations whose objective is to
promote trade with China:
(a) The Sino-British Trade Council.
The S.B.T.C., which was
set up in 1954, is sponsored by the Association of British Chambers of Commerce, the China Association, the Confederation of British Industries and the London Chamber of Commerce. It is given full support by Her Majesty's Government and financial backing of £13,250 a year at present. The President is Mr. John Keswick, one of the senior directors of Jardine Matheson and
Company.
After a slow start, the S.B.T.C. is now doing valuable work. It produces a monthly bulletin and its two
full-time officers are now each making visits to China
about once a year.
(b) The "48 Group". This is a group, originally of 48
companies, set up in 1952.
Several respectable and
powerful firms are members (e.g. Massey-Ferguson), but the Consultant to the Group, Mr. Berger, is closely connected with the British Council for the Promotion of
/International
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9.
Flag A
Flea B
International Trade, a Communist front organisation.
Her Majesty's Government strongly disapprove of and refuse to recognise either the B.C.P.I.T. or the "48 Group". Through efficient organisation, the favour of
the Chinese authorities and assiduous attention to Chinese contacts, the "48 Group" had much success in its early years. Recently, however, the S.B.T.C. (with the support of Her Majesty's Government) has shown that it can provide comparable trading services without the political overtones. Some members of the "48 Group" who dislike
its political colour have now left the organisation.
The Commercial Section of the
16. The Mission in Peking.
Mission has recently been upgraded and is now staffed by
a Counsellor and a First/Second Secretary. With ell trade in
China under State control, the Commercial Section is an
indispensable link with the Chinese Trading Corporations and does valuable work. While trade remains roughly at its present level
there is no need to increase the number of the staff.
IX.
17.
WAYS IN WHICH HER MAJESTY'S GOVERNMENT COULD HELP TO INCREASE TRADE
In two recent despatches (FC 1151/6 of 1 February and FC 1151/45 of 27 September) our Mission in Peking have made
a number of suggestions about how Her Majesty's Government night help to promote trade with China.
(a)
These were as follows:
British Exhibitions in China. We should concentrate on
small specialised exhibitions in the near future and
Her Majesty's Government should give financial
assistance to firms or groups of firms which intend to
/organise
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CONFILENT IAL
10.
organise this type of exhibition.
The Board of Trade
agreed with this idea and there is no difficulty about
a limited amount of financial assistance.
The recent exhibition in Tientsin organised by the
Scientific Instrument Manufacturera' Association, held
at the height of the Cultural Revolution, was as
successful es could have been expected in the
circumstances.
The fact that the Chinese allowed it to
take place at such a time is e token of the importance which they place on such exhibitions.
S.I.M.A. are
At
hoping to organise a similar exhibition in 1969. present no other British exhibition is contemplated, our Mission in Peking have suggested that the Chinese would undoubtedly be interested in an exhibition of agricultural machinery and advanced agricultural techniques. The Board of Trade are considering this proposal. Mr. Peters will be meeting members of the Agricultural Engineers Association Limited and will
discuss this idea with them.
but
(b) Red Carpet treatment for Chinese Purchasing Missions Mr. Hopson said that good treatment for the Chinese purchasing missions to this country would pay dividends and that the Board of Trade were already doing a very good job. He did not suggest any improvements, but he emphasised the necessity of keeping up a high standard of interest and hospitality. The main problem is that the Chinese generally give very little warning about the arrival date or composition of their delegations.
/(c)
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11.
SINO - BRITISH TRADE COUNCIL
(c) Strengthening the S.B.T.C.
The Board of Trade agreed with
Mr. Hopson that we should do everything possible to encourage
the activities of the S.B.T.C. In fact, Her Majesty's
Government already give financial backing to the extent of £13,250 per year (see paragraph 15(a)). Members of the Board of Trade and Far Eastern Department now attend
meetings of the S.B.T.C. as observers.
The S.B.T.C. have recently requested a subsidy from Her
Majesty's Government to enable them to publish a technical journal in Chinese. This journal would be distributed to Chinese trade officials, engineers, technicians, scientists and teachers. It would contain no general editorial text
and would concentrate on technical developments in the United
Kingdom. This is a good suggestion and we are at present
} examining the details with the Board of Trade to see whether the financial support which the S.B.T.C. require (£2,000 in the first year and £1,200 per annum thereafter) can be found. (d) Visits by Commercial Officers to firms in Britain
It has
been agreed by both the Board of Trade and the Foreign
Office that particular care should be taken over the arrangements which are made for our Commercial Officers in
Peking, while on leave, to visit British firms and discuss
with them trade with China. There is no difficulty about
making arrangements for visits of this type, which are, in fact, undertaken by the majority of our trade represent-
atives in overseas countries when they are home in the
United Kingdom. The Commercial Counsellor from Peking is undertaking such a programme during November and December, He will visit at least thirty firms and will be addressing
several Chambers of Commerce.
/He
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12.
He will visit Scotland where he will follow up
a programme initiated by the S.B.T.C.
The Board of
Trade also hope to stimulate interest in Sino-British
trade in Northern Ireland.
(e) Visits by Board of Trade Officials to China
Mr. Hopson
suggested that it would be useful for Board of Trade officials to visit China and meet their opposite numbers.
We agree.
Such visits would help Board of Trade
officials to appreciate the day-to-day problems of
trading with China and to assist British businessmen
in their dealings with the Chinese.
(f) Educating British Businesamen It is generally agreed
by Peking, the Board of Trade and ourselves that we
should do everything possible to educate British businessmen new to the China trade in the problems and
It is possibilities of trading with that country. becoming increasingly important that our businessmen
should take more trouble to brief themselves about
China and learn at least a smattering of her language.
(g) Training Chinese technicians in the United Kingdom
aro considering with the Board of Trade how to encourage more British firms to run training courses in
the United Kingdom for Chinese technicians in
We
connection with the sales of British equipment.
We
have, however, to bear in mind the need for security and the obligation to COCCM to protect "know-how" that would enable the Chinese to make embargced goods.
/(h)
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13.
(h) Chinese exhibitions in Britain It was suggested that
the Board of Trade should encourage and try to make
arrangements for the Chinese to hold small exhibitiona
in this country. We think these would be useful in
demonstrating British interest in encouraging trade
between the two countries. The Board of Trade have,
however, pointed out that embarrassment might be caused
if, on receipt of such an invitation, the Chinese
decided to exhibit products which are on the quote list
and then demanded an increase in their quotas which
could not be extended. This factor would certainly
have to be weighed in the balance before any decision
to encourage the Chinese to exhibit here was taken.
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CHINESE FOREIGN TRADE 1959-65
(£ million)
Appendix A
1959
1960
1961 1962 1963
1964
1965
U.S.S.R.
734
595
328
268 214
161
149
Rest of Bloc
(net Cuba)
341 335
273
251
240
225
253
Non-Bloc
467 480
439
423
527
708
918
Total trade 1,542 1,410 1,040
942
981 1,094 1,320
Source: U.S. estimates
CHI
Appendix B
DE SELECTED COUNTRIES
1960-65
(£ million)
1960
1961
1962
1963
1964
1965
Britain
56.8
43.9
31.8
31.9
42.4
54.5
Japan
8.4
17.0
30.2
48.9 110.9
167.8
France
27.0
18.7
21.6
28.4
28.7
37.1
W. Germany
61.8
25.2 25.1
20.0
27.6
54.2
+
Appendix C
CHINESE TRADE WITH SELECTED COUNTRIES
1964
£'000s
Imports from China
U.K.
France Italy W.Germany Japan
TOTAL
of which:-
24,629 11,009 8,503 *18,480
56,790
Food and live animals
1,821
340
633
2,089
13,603
Hides en aking
963
841
1,876
2,451
344
Oil seeds, nuts and kernels
1,827
185
965
2,254
11,948
Textile fibres
6,489
2,423
2,998
1,662
1,665
Metalifercus ores
354
249
41
225
906
Animal and vegetable oils
and fats
579
56
48
313
653
Chemicals
1,294
963
343
1,040
1,309
Leather
554
577
5
126
46
Textile yarns
4,473
698
548
563
207
Non-ferrous metals
Miscellaneous manufactured
580 2,298
399
1,699
1,735
655
520
250
164
1,005
[
16,251
E
articles
Pig Iron
Export to China
TOTAL
17,733 17,714 6,611 9,094
54,986
of which:-
Wheat/Barley
9,657
=
Textile fibres
2,472
419
961
6,711
Chemical olements and
compunds
566
452 1,072
1,170
13,916
Dyeing, tanning and
colouring materials
268
265
29
1,229
70
Fertilizers
1
319
114
6,614
Plastic materials
136
89
326
270
555
Chemical materials and
product n.e.s.
682
129
186
693
516
Textile yarns, fabrica
1,545
721
2,792
454
3,232
Iron and steel
2,843 2,297
198
922
12,656
Non-ferrous metals
1,051
719
87
537
131
Machinery other than
electric
2,769
618
233
1,412
5,392
Electrical machinery
1,733
302
168
454
1,403
Transport equipment
1,831
177
26
1,333
105
Scientific goods, etc.
1,200
111
64
265
1,093
Miscellaneous manufactured
articles
98
88
4
105
194
Source: O.E.C.D. Scries 'C' 1963 and 1964.
Appendix C (contd.)
CHINESE TRADE WITH SELECTED COUNTRIES
1965
£'000s
Imports from China
U.K.
France Italy W.Germany
Japan
TOTAL
29,720 15,602 13,717 25,965
80,251
of which:-
Food and live animals
4,378
759 1,310
3.536
28,993
Hidca and Crins
1,167
727 2,647
3,499
558
Oil seeds, nuts and kernels 1,070
463 2,226
2,267
18,684
Textile fibres
7.115
2,983 4,579
1,998
3,421
Metalliferous ores
1,266
777
58
982
1,254
Animal and vegetable oils
end fats
2,071
121
64
755
615
Chemicals
1,828
1,669
1,074
1,571
2,130
Leather
664
816
8
227
177
Textile yarns
3,294
870
412
639
396
Non-ferrous metals
595
3,114
235
1,088
2,485
Miscellaneous manufactured
articles
756
716 327
353
2,250
Pig iron
8,646
Exports to China
TOTAL
24,874 21,456 20,148
28,198
87,512
of which
Wheat/Barley
225
Textile fibres
932
752 1,320
5,277
Chemical elements and
compounds
1,003
952 4,427
1,426
17,407
Dyeing, tanning and
colourin materials
501
616
22
910
170
Fertilizers
632
2,491
4,377
785
12,005
Plastic Loterials
152
267
122
242
1,843
Chemical reterials and
products n.e.s.
652
105
879
2,231
1,334
Textile yarns, febrics
1,540
1,562
2,080
238
4.563
Iron and steel
2,208 4,966
2,698
4,351
16,595
Non-ferrous metala
5,036
2,776
113
9,263
477
Machinery other than elect
electric
5.950
2,708
2,463
5,569
16,274
Electrical machinery
2,569
869
356
1,430
4,701
Transport equipment
1,116
2,208
191
252
1,102
Scientific goods, etc.
1,894
253
356
838
2,405
Miscellaneous manufactured
articles
102
136
12
464
362
Source: O.E.C.D. Series 'C' 1965, Imports and Exporta.
Symbol:
- Nil or negligible.
RESTRICTED
Keeting between the Secretary of State
RECEIVED IN ARCHIVES No. 31
for Foreign Affaire and Mr. John Keswick
17 JAN1967
FC6/1
of Matheson & Co., at 4 p.m. on 11 January 1967
at the Foreign Office
Present: Mr. de la Mare
G
Mr. Keswick, who was calling at his request, reviewed
the structure and activities of the Sino-British Trade Council,
which was linked with the British National Export Council.
We had in this country the machinery to increase our trade
with China: it was the political attitude of the Chinese
towards us which prevented any great increase.
2. United Kingdom trade with China was continuing in a
small and undramatic way. Our exports for last October, at
£4 million, were the highest ever. But the trade was almost
entirely in small routine lines: no big contracts were on
hand or in sight.
3. Mr. Brown asked why the Japanese and the Germans were
doing better than the United Kingdom.
Japan had two advantages:
Mr. Keswick said that
she was geographically on China's
doorstep and she was willing to take what China had to export.
The Germans enjoyed the advantage of having no political
commitments
-
Mr. Brown
the Chinese had no ground for saying that the
German Government was against them, whereas they were always
complaining that the British Government was. intervened to say that Her Majesty's Government had taken no
Mr. Keswick action or made any statements hostile to China.
agreed, but the Chinese continually complained about the
RESTRICTED
/United
RESTRIJE.D
They
One was that
United Kingdom press and the B.B.C. which they always insisted
were Government-controlled. There was a certain amount of
tail-twisting in all this. The Chinese were angered at our
close connexion with the United States and used this as an
excuse to claim that Britain was unfriendly to them.
did however make specific complaints against us.
it was we who kept the Cocom restrictions going - They knew
that these restrictions existed at the insistence of the
Americans but they said that whereas other countries were
liberal in their interpretation the United Kingdom followed
the rules far too strictly. In his conversations with his
Chinese friends Mr. Keswick took the view that in the same way
as they themselves felt bound to honour a commitment once they
had accepted it we were bound to follow rules to which we had
agreed. The Chinese retort however was that the commitments
they entered into were honourable whereas the Cocom agreements
were not.
4. Mr. Brown asked Mr. Keswick what he would consider a
desirable outcome of the present disturbances in China.
Mr. Keswick thought that the most desirable outcome would be
that Chou En-lai and Chen Yi, who were moderates, good
administrators and aware that economic development required
political stability, should emerge, first as the ring holders
and later perhaps as the holders of power. He agreed that it
seemed doubtful whether, if Mao disappeared from the scene,
Lin Piao would be able to retain control.
5.
Mr. Brown asked whether Mr. Keswick thought that recent
RESTRICTED
/events
RESTAICHED
events in China had eased the pressure on India. Mr. Keswick
replied that it undoubtedly had and said that this was of
particular interest to him because he hoped that this would
reduce India's opposition to the sale of British aircraft to
China. He thought we should make a real effort to sell the
BAC 111 (which he described as "really an extension of the
Viscount"). Kr. Brown commented that he had just been looking
through the list of British aircraft which might be considered
for sale to China; he thought it very difficult to put one's
hand on one's heart and say that there was any which would not
increase China's military potential.
6. Mr. Keswick made it clear that he was not suggesting any
change in United Kingdom policy towards China which he
thought was right. If however developments in China should
make it possible for the two countries to get closer politically
he felt confident that this would be reflected in the volume of
trade.
RESTRICTED
Am
12/1
SB
C
Sino-British Trade
Trade Council
中英贸易协会
President: Mr. John Keswick C.M.G.
RECEIVED IN ARCHIVES No.31
1 2 JAN 1967
FC6/1
The Association of Brink Chamber of Commerce
The Chan Assocation.
The Confederation of British Industry
L
The London Chamber of Commerce
Our ref: PSM/VR.
21 Tothill Street, London S.W.] Whitehall 6711
To Members of the Executive Council.
13th January 1967.
Dear
вит того,
+
5
are as follows:
Exports to China
December £3,038,494
Provisional figures for December and for the year
231-905 Jan/Dec 65
£31. M
Jan/Dec 66 Jan/Dec 65
Increase
£24. 9 M
28.12
Imports from China
2,184,103
33. 8
#29. 7 M
13.8%
Total
£65. 7 X
£54. 6 M
20.3%
1.
Nr. or
M. Bolly
3.
Enter
ad
મ.
A very healing
1965. We
maintain
اد
rets
ملح
well
evon to
Yours sincerely,
1967.
DOM 16/1
N.F. Webb Secretary-General
SB Sino - British Trade
TC
中 英 贸易 协会
RECEIVED IN
Council ARCHIVES No. 31 Council
President: Mr. John Keswick C.M.
13 JAN 1967
Feb/l
The Association of British Chamber of Commerce
The China Association
The London Chamber of Commerce
The Confederasion of British Industry
Our ref: NFW/VR.
Members of the Executive Council.
De ar
the moss.