TNAG-0741-FCO40-945-Relations-between-China-and-Hong-Kong-1978 — Page 128

CONFIDENTIAL

DSR 11C

begin within an already large defence efforte. This will be accompanied

by development of the economic and scientific infra-

structure necessary for overall defence modernisation

takes place.

28. The Chinese appear to be approaching foreign defence

philosophy and technology in four ways:

(a) the study of foreign defence methods;

(b) the manufacture under licence in China of

foreign defence equipment; they are for example

now preparing

the manufacture of Spey engines

under the 1975 agreement with Rolls Royce;

(c) the purchase of equipment for defence

production; eg specialised machine tools;

(d) the limited purchase of certain defence

equipment either to fill pressing needs or to permit

its technological exploitation.

The foreign equipment and technology in which they have

shown interest is that relating to marine gas turbines,

anti-tank missiles, air-to-air and ship-borne anti-

aircraft missiles, avionics (particularly radar),

communications equipment, low light image intensifiers

and helicopters (including those for naval anti-submarine

warfare). Their interest in Harrier has been less explicit

29.

Because of their present economic constraints,

traditional fears of over-dependence upon foreign suppliers

and the wish to concentrate upon self-production, the

Chinese are unlikely to make more than a minimum of

/weapons

CONFIDENTIAL

D 107991 400,000 7/76 904 953