TNAG-0741-FCO40-945-Relations-between-China-and-Hong-Kong-1978 — Page 103

CODE 18-77

Mr Cornish (Planning Staff K114)

POLICY TOWARDS CHINA

1.

Reference

HiKK 02011,

KELDIVER

24 JANISTS

D-SK UPTION.

INDEX

No

PA

Thank you for letting us see a copy of the fourth draft of your paper. We have only three textual amendments to suggest. The first two are designed to ensure that the implications of military sales to China for Anglo-Soviet political and commercial relations are adequately reflected in the conclusions of the paper as well as in the main text (the second sub-section (b) in para 42 fully reflects our earlier amendments and is now fine).

(i) In para 45, insert a new sub-section (d) as follows:

"(a) In each instance, however, Ministers will need

to consider the implications for Anglo-Soviet political and commercial relations.

(ii)

Para 62, second half, redraft:

#!

"Politically the views of the United States and of other members of COCOM must be taken into account. We must also weigh carefully the consequences of the sale of particularly sensitive items of military technology to China for our political and commercial relations with the Soviet Union. The recommended course of action is to promote arms sales within the limit of what the British Government believe to be strategically and politically acceptable, to press for COCOM agreement, and to abide by the result, while retaining the possibility of going ahead against opposition with a particularly important sale if we consider COCOM objections to be unreasonable."

(iii) Para 40: about two-thirds of the way down, the

sentence about the improvement in Soviet economic performance comes close to suggesting that Western technology and equipment have made a direct contribu- tion to the Soviet defence effort. We would prefer something on the following lines:

"It is generally recognised that the Soviet Union has been able to improve its economic performance by the acquisition of Western technology and equipment, and that this has probably made the allocation of sufficient resources to the military sector of the economy less painful than would otherwise have been the case. the same time.

•

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At

23 January 1978

R B Bone

Eastern European & Soviet Dept (W 103 233 3761)

CONFIDENTIAL