TNAG-0741-FCO40-945-Relations-between-China-and-Hong-Kong-1978 — Page 19

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but may be shelved again in the near future in the interests of the conclusion of a Japanese/PRC peace and friendship treaty. But whatever the circumstances, Japanese sensitivities on this point should be borne in mind. The Japanese Transport Minister, Mr Fukunaga, is reported to have told the press on 15 April that the Maritime Safety Agency would expedite the construction of large high speed patrol ships to defend Japan's expanded territorial waters in the wake of the latest Chinese incursion off the Senkaku islands. The Paracels seem to be firmly in Chinese hands although the Vietnamese have not abandoned their claim and the USSR has regularly attacked Peking's alleged expansionist ambitions in the South China Sea. The Spratlys are the most remote from the PRC and could prove the most contentious of all three disputed areas, particularly in view of the build up of Filipino forces in the vicinity and a sizeable Vietnamese presence nearby. The possibility of any open hostilities escalating to the point where the USSR and USA become involved could not be ruled out. The discovery of oil in commercial quantities in any of or all three areas would inevitably raise the present temperature and the PRC-would clearly have need of a well equipped naval force in either a defensive or offensive role, as the case might be, to assert its claims in the area concerned.

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Mr Burns, ACDD

Mr Goodenough, MAED

Mr Alston, ESSD

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Mr Holloway, SAD

Mr Smith, SEAD ·

Mr Hime, SWPD

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Mr Willson, NAD

Mr Mehew, MOD

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