MOTION FOR THE EASTER ADJOURNMENT
CHINA
BACKGROUND NOTES
Visit of Lord Carrington
1.
Lord Carrington visited China from 1-5 April as part of a Far Eastern tour which included Pakistan, Hong Kong and Japan. Postponed from October because of the Iran-Iraq war, this was the third visit by a British Foreign Secretary since 1972. It follows visits to the UK by Chairman Hua (end 1979) and Foreign Minister Huang Hua in October 1980. Sino-British Trade
2.
In 1978-79 there were high hopes that the new Chinese leadership would import Western plant and technology on a very large scale. But the Chinese soon realised that their economy could not cope with such large injections of foreign technology and the funds to pay for it were not available. Since mid-1979 a policy of economic readjustment has been instituted, placing emphasis on agriculture and light industry at the expense of heavy industry such as stell and petrochemicals. At the end of last year further cuts were made. A number of foreign contracts have been suspended or cancelled, including one or two involving British companies.
Defence Sales
3.
Sino-British defence contacts have grown in recent years. Mr Pym visited China in March 1980. Some contracts have been signed (the largest by Marconi for its supply of avionics equipment worth £40 million). The Chinese have made it clear that they are no longer interested in Harrier and prospects for other sales have been adversely affected by economic retrenchment.
Claims Against China
4.
Our claims against China consist of those arising from expropriation of British assets by the Communists after 1949; and unsettled debt incurred by previous governments. Recent discussions with the Chinese have indicated that they would be prepared to consider certain post-1949 claims but they refuse to acknowledge the obligations of previous regimes.
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