CONFIDENTIAL
modern technology to China.
Within the Community the
FRG offers the strongest competition, except in defence related sales, where France is our main rival.
15. The mumber of countries willing to provide bilateral aid to China in various forms has risen significantly
in recent months. It involves some of our main competitors including Japan, Belgium, Denmark, Canada and Italy, while Sweden has become noticeably more generous with the terms of its mixed credits. Unless we are prepared to give China a similar priority within the UK aid programme this development is likely to put us at a disadvantage in our efforts to promote our exports in this market.
16. With the Sino-Soviet dispute unlikely to be resolved in the near future, Soviet apprehensions about China's long-term aims and prospects will colour Soviet reactions to other countries' dealings with China, especially in the delicate areas of defence sales and transfer of technology. Sino-Soviet rivalry will continue to lead China to give support to National Liberation Movements in Third World countries and will also be a major factor in South East Asia, including Indo-China. Such support may in some cases be compatible with British interests. But although China's real preoccupation is her relationship with the Super-Powers, she can be expected to side with the Third World in discussion of contentious issues in
international fora.
CONFIDENTIAL
/SECTION VII
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