TNAG-1172-FCO40-1453-Future-of-Hong-Kong-1982 — Page 94

OI-

Den

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CONFIDENTIAL

Mr. Wiluaren or Mcuk 11/6

233 7488

7488 not got

CABINET OFFICE

70 WHITEHALL

LONDON SWIA 2AS

See overeal. it ho han

the point about the Ich dollar or, Brit Ladungtikan is about

MET is booming

Why His is a

Mjet

10 June 1982

DINNER AT CHINESE EMBASSY

146

HIR 04011

17 JUN

1. On the evening of 7 June Mr Clements and I were given dinner at the Chinese Embassy by Mr Lp Jiahuan. Mr Wang Yihao was also present. Mr Lo had invited me after our meeting at the buffet dinner given by the Embassy last month for which you arranged my inclusion. He had asked me to bring along a colleague who dealt with "Atlantic", affairs; Mr Clements has been producing some of the daily assessments in connection with the Falklands crisis.

(349)

Pasillo

2. Most of our discussion centred on the South Atlantic and on the transatlantic relationship (which it transpired was our hosts' principal interest), with the Chinese being predictably gloomy about the prospects for United States relations with Latin America and Western Europe, and the opportunities this opened up for the Soviet Union. They seemed particularly concerned about the United States's alleged interest in making use of the Falklands as a base "like Diego Garcia" with an eye towards some future conflict over resources in the Antarctic, and were perhaps not entirely convinced by Mr Clements' reasoned rebuttal. Nor, I fear, were we able to alter their view that the Versailles Summit had done no more than "paper over the cracks" in the Alliance resulting most recently from what they saw as the United States'> discomfort at having been forced to choose between Europe and South America over the Falklands and particularly West Germany's doubts about the merits of economic sanctions against the Soviet Union and its allies, as well as long- standing differences over disarmament, interest rates, the Middle East, etc.

3. We touched on Sino-United States relations and Taiwan briefly. was adamant that all United States arms sales to Taiwan would have to cease before the authorities in Taipei would respond to Peking's reunification proposals, and claimed that Vice President Bush's recent visit had not brought a solution of the problem any nearer. It was grudgingly accepted that Taiwan would probably still be able to acquire weapons from, eg South Korea, Israel or South AFrica if United States sales ceased, but Mr Wang argued that as with Israel, Taiwan's intransigence was directly related to the assurance of continued United States support. When I suggested that the parallel was not entirely

Mr Wang

NJ Cox Esq

FED FCO

1

CONFIDENTIAL