TNAG-1623-FCO40-2237-Relations-between-Hong-Kong-and-China-1987 — Page 52

UK/CHINA RELATIONS

CONFIDENTIAL

GENERAL

1. Bilateral relations are excellent.

Hong Kong remains

a central element in UK/China relations. Close contact

on Hong Kong issues is maintained through the Joint

Liaison Group (JLG) which was set up in accordance with the Joint Declaration and will establish a permanent base

in Hong Kong in 1988. The development of representative

government in Hong Kong has been a source of friction,

centred on Chinese concern that direct elections may be

introduced next year following the current review being

held by the Hong Kong Government. Ministerial and

political exchanges are increasing rapidly, as are

contacts and exchanges in all other fields. The State

Visit by H M The Queen, accompanied by Sir G Howe, in

October last year was a great success, as was the visit by HRH Princess Margaret in May this year.

TRADE

2. The UK market share, although still small, is

increasing and the balance of trade with China has

improved. UK exports to China in 1984 were £536m and

imports £327m. Although, following the conclusion of the

Hong Kong talks, the Chinese indicaced they would give

political support to British commercial efforts, it has

become increasingly clear that many British companies will be favoured only if HMG can offer concessionary finance. Nevertheless, Britain is well-equipped to meet the main Chinese development priorities, and British

firms have been successful in winning contracts for

machinery, chemicals, aircraft, scientific instruments

and steel.

SB3ABE

CONFIDENTIAL