Adrian Swire Esq
Messrs John Swire & Sons Ltd
Regis House
43-46 King William St London EC4R 9BE
13 December 1978
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Thank you for your letter of 15 November about the possible implica- tions for Cathay Pacific Airways of our concluding an Air Services Agreement with the People's Republic of China. I am sorry not to have replied to you earlier: I held back in the hope that we might get some definite news from Peking, but none is yet forthcoming.
Throughout the long drawn out negotiations with the Chinese, all of us here have had very much in mind the importance to Cathay Pacific of their earnings from services to and through Taiwan. Indeed, this is the reason why the ratification of the agreement negotiated in 1973 has been held up for the past few years.
However, it is now six years since full diplomatic relations were established between Britain and China. Relations are now very good and it is very much in the interests of this country and of course of Hong Kong that they should continue to develop. Against this background both we and the Chinese are finding it increasingly anomalous that there should be no Air Services Agreement and no direct air link between our two countries. The fact that we do have frequent air services with Taiwan makes the position more awkward.
From the commercial angle, while it is true that until recently it was unlikely that profitable services could be operated between the UK and China, the recent upsurge of both business and tourist travel to China now makes the prospect a good deal more attractive. But this is not the main reason why there is now a renewal of interest on both sides. I can, however, confirm that in pursuing our attempts to conclude an Air Services Agreement with China we shall remain very conscious of the importance of avoiding provoking Taiwan into retaliatory action against CPA.
J. R. Scute
JR Steele
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