CONFIDENTIAL
11.
Trade with Brita in
Sino-British trade has provided some big contracts. We have done particularly well in the aviation field with the sale of Tridents and, most recently, of Rolls Royce Spey engines; indeed China is one of our aircraft industry's most important overseas markets. However, in 1974, China's principal trading partners were Japan (24%), the US (8%) and Hong Kong (6.5%); Britian rated only 2.5%.
12. Japan and the United States are likely to maintain their dominant positions in China's trade but the Chinese are unlikely to want to become over-dependent upon particular partners and will always seek to diversify. They are trying to develop a relationship with the EEC, and, in Europe, they will probably seek a rough balance between the French, the Germans and ourselves.
Sino-Soviet Relations
13. China's opposition to the Soviet Union is the fulcrum of her foreign policy. Similarly, China is particularly significant for Europe as a factor in Western Europe's relations with the Soviet Union. At the time when Sino-Soviet relations were good, there were few openings for Western European efforts to cultivate extensive relations with Peking; China's belligerent anti-Western attitudes, together with the Korean war and the invasions of Tibet and India, made Western Governments cautious. However, when the Chinese emerged from the Cultural Revolution at the end of the 1960s, it became clear that, following their reassessment of the threat from the Soviet Union, they wished for a closer relationship with the West. The latter in turn increasingly saw the value of involving China in world affairs - a process which led inter alia to her entering the UN in 1971, President Nixon's 1972 visit to China and our own exchange of Ambassadors. The Chinese now support European unity and the NATO alliance because they tie the Russians down in the West. China sees Europe as a source of high technology and industrial goods; yet her prime interest is not in the economic integration of Europe but in its political and military cohesion.
14. It can be argued that the advantages to the West of the Sino-Soviet dispute have been, and will remain, limited. China's support for Hanoi continued through the Vietnam conflict. The Russians, far from diverting troops from their Western Front, have created another vast army which could, in extremis, one day be turned against the West. Nor would exacerbation of the dispute of the dispute into full-scale armed conflict, possibly leading to a nuclear exchange, serve Western interests: radio-active fall-out would respect no boundaries.
15. On the other hand, the threat of a war on two fronts must restrict Soviet freedom of action, while the end of a monolithic Communist bloc has been accompanied by the emergence of divisions in national Communist movements which in certain cases, such as India, has considerably weakened their impact; this has been one of the factors encouraging the development of heterodox attitudes among the larger Western European parties. The Sino-Soviet dispute has undoubtedly
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CONFIDENTIAL
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