TNAG-1622-FCO40-2236-Relations-between-Hong-Kong-and-China-1987 — Page 161

CONFIDENTIAL

12.

The number of countries willing to provide bilateral

aid to China in various forms has risen significantly. It

involves some of our main competitors including Japan,

Belgium, Denmark, Canada, Australia and Italy. The UK is

prepared to offer China commensurate aid terms from the UK

aid programme and has granted, and the Chinese

have allocated, development loans to the value of £300

million, equal to £90 million over 20 years.

13. The Soviet Union has sought to improve Sino-Soviet

commercial and economic relations, and has achieved some

success over the past two years; she is now making efforts

to extend these links into the political and Party

sphere. Other East European countries, which are not

affected by the Soviet Union's 'three obstacles' have had

more success in increasing trade and normalising Party

relations with China. Third world countries, particularly

the most backward economically and the more "progressive"

politically, as well as liberation movements, continue to

seek Chinese economic, military and political support.

China is most generous with the latter, and sells arms to

most prospective buyers.

SECTION VII: THREATS TO AND OPPORTUNITIES FOR BRITISH

INTERESTS

A.

14.

THREATS

I.

Hong Kong

Failure to co-operate in achieving consistency between

the Basic Law Provisions on government structure and

PR6AAJ

CONFIDENTIAL