TNAG-0616-FCO40-764-Policy-of-UK-on-status-of-Hong-Kong-1977 — Page 34

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effect if Britain appeared to the Chinese to be

unwilling to discuss military sales. This might make

little difference in the end if all our partners acted

likewise, but could seriously affect British civil

exports if others, and especially the French, were more

forward than we over military sales.

32. A significant expansion of civil exports to China

would have no repercussions for British exports in

third countries. Defence sales could, however, incur

negative reactions, notably in the Soviet Union and

perhaps the United States. If, for example, Rolls Royce

were seen to be actively involved in a large sale of

Harriers to China at a time when their RR211 deal with

the Soviet Union was still under negotiation, the Russians

might prefer on political grounds to turn to Rolls

Royce's American rivals. The Spey deal does not,

however, appear to have harmed either Rolls Royce's or

general British exports in the Soviet Union. The

Russians normally hardheadedly seek the best product for

their purpose on the best terms. But political

considerations are not to be excluded.

No rules can

be laid down in advance except to say that, in the

first instance, the firm must judge its own commercial

advantage. If wider British commercial interests looked

like being involved, however, the Government would need

to intervene.

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