TNAG-0029-FCO40-65-Relations-with-China-1968 — Page 20

CONFIDENTIAL

result would be that the "Demodocus" might be held even longer.

The Governor accepts this but suggests that it would appear

worth considering, if and when the "Demodocus" is released,

whether Blue Funnel should cut down visits and whether

meanwhile other British shipping companies should be encouraged

to follow suit.

Preliminary Recommendation

We shall have to consult the Board of Trade who are never

enthusiastic about advice of this kind to British shipping,

If and and will certainly prefer any advice to be informal. when the "Demodocus" is freed, the shipowners themselves, who

see great potential advantage in the China trade in the long

*

term, are likely to accept the risks.

(b) Economic Sanctions

The Board of Trade are proposing routine quota increases

for 1968 for goods of Chinese origin along with goods from

various other countries of the Eastern bloc. Sir D. Hopson

has expressed the hope that this proposal will be blocked. China needs to increase her export products this year and would

note the fact that none of her quotas had increased, and British

merchants in London could be asked to ensure that the Chinese

Mission here knew the reason.

Preliminary Recommendation

I think it would he right to stall on quota increases

for the time being.

CONFIDENTIAL

/(c)