TNAG-0844-FCO40-1054-Visit-of-Lord-Carrington--Secretary-of-State-for-Foreign-and-1979 — Page 3

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6 JUL 1979

SONA

RECORD OF A MEETING AT GOVERNMENT HOUSE, ONG ON 0830 ON SATURDAY 30 JUNE 1979

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Present

The Rt Hon

the Lord Carrington KCMG

Mr HA H Cortazzi

Mr G G H Walden

Mr N Fenn

Mr JS Wall

LAST PAPER

HE the Governor, Sir Murray Maclehose

GBE KCMG KCVO

The Hon Sir Jack Cater KBE JP

The Hon C P Haddon-Cave CMG JP

The Hon Li Fook-kow CMG JP

The Hon L M Davies CMG OBE JP

Mr D R Ford MVO OBE JP

Dr D C Wilson

Mr P Cradock CMG (Ambassador, Peking)

CHINA

1.

Mr Cradock said that the pace of modernisation in China was now slower than it had been a year before. Hua's recent report to the NPC had contained no surprises. Greater importance was to be attached over the next three years to modernising the infrastructure and to the development of energy and coal resources. The pace might be a little slower than we had anticipated, though there would be no, stagnation. This ought to be welcome to us since we did not want to foster a programme of modernisation which would lead to China falling on its face.

2. Mr Cradock said that Deng Xiao Peng was still the most important figure in China. Deng had been a victim of the cultural revolution whereas Hua had been a beneficiary. The two men agreed on the pace of modernisation though they disagreed on the speed at which to change the policies of Chairman Mao: Hua was obviously more vulnerable to the debunking of Mao. On the whole, Deng and Hua operated on a policy of live and let live. Hua's visit to Europe would boost his image just as Deng's visit to the United States had boosted his image.

3. Mr Cradock foresaw no great change in China's external relations. The Chinese were due to talk to the Russians in July. A Chinese official had told him that the two sides would kick the ball about but there would be no goals. The long power struggle with Vietnam for the control of South-East Asia would continue. Further military action was not, in all circumstances, to be ruled out. There had been a tremendous upsurge in relations with Europe and the West and our own relations had been marked by the Cooperation Agreement, the Air Services Agreement and the Energy Exhibition. The latter was a first step towards orders and would not lead to immediate deals.

/prospects

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CONFIDENTIAL