controls are kept under regular review but changes require the unanimous agreement of member countries. There is no early prospect of China's removal from the list of proscribed destinations.
9
PL4 Air to air Missile (AAM) Project
The PLA Air Force are extremely keen to acquire a sophisticated AAM (their PL4 programme) and to this end their main procurement organisation - the China National Aero Technology Import and Export Corporation (CATIC) has made several approaches to UK manufacturers involved in this field.
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Security objections preclude the release of the fuze manufactured by Thorn EMI or of any techology relating to its design. CATIC have made several attempts to get the decision on the fuze reversed; including representations to the Minister (Defence Procurement). MoD's view remains that the fuze cannot be released. CATIC have made no secret of their disappointment at this attitude. They have approached French and US sources with a similar mission; reportedly to no better effect. If the Chinese raise this (which we think unlikely, since they have given no warning that they will) the Prime Minister should point out that national security considerations preclude the supply of the fuze for the AAM or of any technology relating to it. British industry is however prepared to consider proposals for the development of a fuze specifically for China. As far as general defence topics are concerned HMG remains keen to assist where possible.
10
China and the GATT
China was granted observer status to GATT in November, and is duly expected to seek full membership. China may seek to re-occupy the seat held by the pre-1949 Government, rather than negotiating new terms. Accession to GATT by a state-trading (and developing) country of China's size could impose significant strains on the open trading system and create an uncomfortable precedent should the Soviet Union seek to join. These disadvantages are not insuperable and there are compelling political reasons in favour. This argues for securing satisfactory new terms of accession properly reflecting China's status as a major non-market economy. Accession is a matter for GATT as a whole. The Community speaks with one voice there and we shall have to concert our position with other Member States.
11
Aid/Soft Credit
A modest technical co-operation programme with China was started in 1983; £2 million a year is currently allocated to this programme and is used to pay for English language teaching,
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