TNAG-0032-FCO40-68-Relations-with-China-1968 — Page 220

CONFIDENTIAL

Cypher/Cat A

PRIORITY PEKING

ΤΟ

FOREIGN OFFICE

Telno 672

19 July 1968

694

CONFIDENTIAL

Addressed to Foreign Office telegram No. 672 of 19 July, Repeated for information to Hong Kong.

My telegrams Nos. 585 and 586 and your telegram No. 1237 to Hong Kong.

($90)

1603

4 (597

I trust you will soon be sending comments on my telegrams under reference about the possibility of mounting economic pressures against the Chinese. There is increasing evidence here that China is acutely short of foreign exchange. Any hint that British import quotas might be reduced would make a distinct impact on the Chinese.

2.

The disgraceful way in which the Chinese have treated Vickers-Zimmer without any regard for terms of contract will make it necessary for British companies to think very seriously before they enter into any large contracts with the Chinese.

3. While we are studying the economic pressures and in the light of Vickers-Zimmer case and our continuing detention (including Commercial Counsellor and Secretary), I hope that you will be able to suggest to Mr. Keswick that it would be desirable if he and the staff of the Sino-British Trade Council (partly supported by Her Majesty's Government funds) kept their contacts with the Chinese Commercial office to the bare minimum. I trust that S.B.T.C. will not give the Chinese false view of our relations by being too cordial to them, and indeed I think they should be asked when they see the Chinese to say that Sino-British trade cannot be expected to improve when contracts are unilaterally cancelled and when British commercial staff in Peking are being treated as political hostages by the Chinese. I realise this may all be grist to the mill of Mr. Berger and his group, but I think we shall just have to accept that.

Foreign Office pass Priority Hong Kong.

Sir D. Hopson

[Repeated as requested]

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