TNAG-1253-FCO40-1586-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 84

Mr Donald

Private Secretary

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MAGLIVED IN AAN SY NO. 51 2 8 JUL 1983

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M. Cox

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Mark Elliott

7 July 1983

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Sir J Bullard Mr Giffard HKD

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SINO-US AND SINO-SOVIET RELATIONS

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1. In his minute of 5 July Mr Holmes asked for our views on what Zhao Ziyang, as reported by Mr Fraser to the Prime Minister, had to say during his visit to Australia about China's relations with the United States and the Soviet Union.

2. The Prime Minister's conversation confirmed earlier reports from Canberra of Zhao's gloomy remarks about Sino-US relations during his visit there in April. March-April was indeed something of a low point in Sino-US relations. Shultz's visit to Peking in February had done something to assure the Chinese that the US Administration wished to resume the development of their relations, but had not resulted in any progress on the two major bones of contention, the supply of arms to Taiwan and the transfer of technology to China. (There are a number of secondary issues such as Chinese targets for US textile import quotas and US private bondholders' claims against the Chinese government, but Chinese leaders have not made much of these in high-level contacts.) The Chinese had then (March) held their second round of talks with the Russians about improving state-to-state relations.

This, while drawing a blank on the major issues of Cambodia, Afghanistan and Soviet border troop strengths, had led to signs of an intention on both sides to increase trade and non-political exchanges and to resume Vice-Minister level contacts in due course.

The

3. Since then the picture has to an extent changed again. US Secretary for Commerce conducted a more successful visit to Peking in May in which progress was made on the technology transfer issue: for purposes of transfer of civil and 'dual-use' technology the Administration have recategorised China as a friendly nation. The visit also led to subsequent successful exchanges on commercial, legal and export credit matters, and was followed by a productive meeting of the US-China Joint Commission on Science and Technology. Throughout this most recent period both sides have avoided con- tentious statements on Taiwan.

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