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The crucial facter?.
Mr Fukuda himself had mentioned it both to the Vice President and to the President. If the UK wanted a way of capitalising on Japanese goodwill this was well worth considering. Mr Cortazzi said in present circumstances there was little chance of securing a British contribution for such a project. (Mr Holbrooke made the same point again later in the meeting).
5.
Mr Holbrooke said that the US had sought to avoid dealing with bilateral issues in isolation and had tried to consider them in the light of inter-related global issues. He hoped that the issue of the reprocessing plant in Japan could be resolved this autumn. Mr Gleysteen said if it were not resolved, at least it was not a crisis issue. He thought the Japanese would make some superficial adjustment to meet the US position without any fundamental shift of policy. They might go for some form of re-processing to produce something which was not totally plutonium, although the economics of this were as yet unknown. Or they might just temporise. Breeder technology and the fuel cycle were issues of fundamental importance to them. The Japanese did not believe the Americans had really thought the Japanese problems through and they were not entirely wrong.
6. Mr Holbrooke said the main thing they looked for from the Japanese was stimulation of the economy. They hoped the Japanese would continue to aim for a 6-7% growth rate. Mr Heginbotham said that trade and balance of payments problems, the freedom of the exchange rate and the MTN issues would come to be more and more the focus in US/Japanese exchanges as the September talks approached. Mr Holbrooke said a further issue arose out of the conclusion of the US/UK civil air agreement. A revised air agreement with Japan was now an outstanding issue and this was on the edge of becoming a political issue. It remained to be seen whether the new US/UK agreement would set a precedent or whether it was a
off job resulting from the 'special relationship'. It was certainly one which was thought to give the UK a greater advantage than before. Mr Cortazzi said each side had gained.
CHINA
7.
Mr Cortazzi said that we were trying to improve our bilateral relations. We had a modest level of trade. Our high level visitors, such as Mrs Thatcher were well received but there had been few inward visits to London. Hong Kong was an important factor but was causing no particular problems at the moment. The lease expired in 1997 but this should not be an issue for the Chinese since they did not recognise the lease. So long as Hong Kong remained of value to them, he did not think they would force the issue, though it had been a problem during the Cultural Revolution. Chinese representation in Hong Kong was another potential issue which was quiescent at the moment. The Chinese had no official representation at the present time. By and large we did not see much movement in our relations until the leadership had settled down and become less inward looking.
Mr Holbrooke said that at the moment the US did not expect to achieve very much during Secretary Vance's forthcoming visit to China. He agreed that the current Chinese leadership was inward looking and insular. They were not ready to mitigate in any way the political problem that Taiwan posed for the United States.
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