TNAG-0747-FCO40-951-Visits-of-Foreign-and-Commonwealth-officials-to-Hong-Kong-1978 — Page 82

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EXCHANGE OF VIEWS

5. After lunch, Lir Cortazzi asked to have a few words with Mr Sung about bilateral matters. Firstly, he wished to say how useful it was to be able to have an exchange of views in depth with China on a number of issues of mutual interest such as Soviet involvement in Africa, South-East Asia and the Pacific. We would welcome such exchanges at official or ministerial level as appropriate. Kr Sung agreed with this.

DEFENCE SALES

That

6. Lr Cortazzi aaid Mr Sung had seen Lord Peart's speech in the House of Lords and was aware of the discussions that took place between Lr Li Ch'iang and Dr Owen in December last year. We were looking forward to the visit of marine turbine experts to Rolls Royce. The Chief of Defence Staff had invited experts to visit the British Army Equipment Exhibition and other exhibitions including the Farnborough Air Show. We were very conscious of the relationship between China and Rolls Royce; it was a very good one despite certain differences on pricing to which Mr Sung had referred at lunch. morning Ir Yang Ying had said that China was interested in anti- aircraft guided missiles and anti-tank missiles. They were interested in our developments in this sphere and also in those of other countries. The exhibitions he had already mentioned would help to show the Chinese what we had to offer. We were also conscious of China's interest in the Harrier aircraft. He thought it would be very useful for experts from both sides to discuss these questions so that there was a better idea of what interest the Chinese had in these weapons and the extent of their interest. Mr Sung would be aware of the international aspects. If China was interested in making pur- chases this would need very careful consideration. He could not say that the UK Government would necessarily be able to agree that con- tracts should be signed but the Government would do its best to con- sider these issues positively, He realised that this was something of a chicken and egg problem. The Chinese would not wish to commit themselves to purchasing certain equipment unless it was sure of British Government approval for the sale. Britain on the other hand would not wish to go ahead in solving the various difficulties that would be involved in approving a sale unless it knew of a clear Chinese interest in purchasing; but he wished to stress that Ministers would consider any sales positively in the light of our international obligations and he regarded his present statement as being an advance on Lord Peart's speech. The sale of defence equip- ment was not the purpose of Sir Neil Cameron's visit which was of a much broader nature but Ministers would be asking him on his return about the extent of Chinese interest. He thought it better that pro- gress in discussions on these matters were carried out privately and should not be discussed in the press On the international aspects he said that the UK Government would not be put off by Soviet threats. Lir Sung said that modernisation of China's defence equip- ment was a current priority and "ho Chinese planned to purchase equipment and knowhow from Britain as well as other Western European

CONFT DEN TIAL UK EYES A

/countries.