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25.
Dr Owen said that the Prime Minister had. told Mr Huang of our decision to allow Rolls Royce Ltd to negotiate a contract on marine gas turbines. He wondered how extensive a maritime response China felt it needed to meet the Soviet threat. Did China intend to extend its naval capacity? Mr Huang said that China had a long coast line.
It therefore needed a strong navy to protect it. The fleet which China possessed was for coastal defence, but it needed modernising. In China's view the question of Indochina was not a regional or isolated one. It was not a matter simply between China and Vietnam or Vietnam and Cambodia, but a question of the Soviet Union pushing its strategic deployment. Dr Owen said he did not disagree with this analysis. He added that he must be careful how much he said on this subject, or the Chief of Naval Staff would be wanting to visit China. He had already had to defend the Chief of Defence Staff in public, and he could not do it twice!
26.
On ASEAN, Mr Huang said that its essential role was to maintain vigilance against expanionist moves by Vietnam. China had already supported ASEAN in moves to make South East Asia a zone of peace and neutrality. The expansion of co-operation between ASEAN countries and the development of their economies was conducive to stability in the area. China had good relations with Malaysia, Thailand and the Philippines. It had not yet established relations with Singapore but had regular contacts. Relations with Indonesia had been suspended and were not yet restored. Improvement in relations depended on Indonesia which had some internal problems. Dr Owen said that he agreed with this, but there was not time to carry on the discussion since he knew Mr Huang had an appointment to see Mr Heath. Dr Owen had two good reasons for not wishing to offend Mr Heath. In the first place he had done a great deal to promote Sino-British relations, and in the second place, he was one of the few supporters the Government had at the moment!!
27.
The meeting ended at 1700 hours.
!
FAR EASTERN DEPT
18 OCTOBER 1978
Distribution: see attached list
9.
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