TNAG-1711-FCO40-2389-Future-British-Consulate-General-in-Hong-Kong-HMS-Tamar-1987 — Page 35

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European trading partner, followed by the UK.

6.

Sino-Japanese relations are important bilaterally,

and, increasingly, within the Asian-Pacific region.

Japan is China's largest trading partner and China is

fourth among Japan's trading partners. Economic links

and Japan's regional role seem strong enough to weather

difficulties arising from Japan's large trade surplus,

her decision to break the 1% of GNP barrier on defence

expenditure and Chinese perceptions of Japanese

insensitivity over their historical relationship.

7. In Asia, China has made substantial efforts to

improve her relations with ASEAN states in recent years.

Relations with Thailand have become quite close

(albeit with some reservations on the Thai side) as a

result of the countries' joint interest in resisting

Vietnamese occupation in Cambodia. Apart from support

for the Khmer Rouge, China claims no longer to provide

material support for communist insurgent groups in South

East Asia. However, despite high level visits, Malaysia

is still suspicious of Chinese regional intentions, as is

Indonesia with which diplomatic links remain suspended,

though direct trading links were resumed in 1985.

FC6AAK

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