CONFIDENTIAL
4.
Prime Minister Takeshita's first official visit overseas as Prime Minister had been to the 20th anniversary celebrations of ASEAN. It was significant that Japan had participated. ASEAN required political, economic and social stability, and Japan had indicated its willingness to assist by pledging $2 billion to ASEAN countries of the overall $20 billion recycling package. Some of the participating countries at the ASEAN Summit meeting had been worried about security in Manila and the Philippines. The Japanese delegation had thought security was good. The Secretary of State said that our policy towards ASEAN was to continue to make available to them inward investment and technical assistance, and to offer market opportunities for their goods in our countries. As the various countries achieved economic maturity it was important to press them to liberalise. ASEAN operating as a group had given a useful boost of self-confidence to the individual member countries, and EC meetings with ASEAN had assisted that process. Japan and the UK had an interest in encouraging ASEAN economies to create a solid base for political development. The UK was now the second largest provider of investment capital to ASEAN; this was one way in which the UK paid a special role vis-á-vis ASEAN. The UK had also played a useful role in the EC in arguing against the introduction of an Oils and Fats Tax, which would have been to ASEAN'S disadvantage.
5.
Both
On China, we shared Japan's basic perceptions. It was useful to try to ensure that China remained open to Western economic influences, and we welcomed the leadership changes last year.
China was important to us not only because of Hong Kong but also because of its effect as a force in the Asian region. We were not over-worried about the prospects of rapprochement between the Soviet Union and China, since, if it happened at all, it would happen slowly. The maintenance of close links by the West with China should guard against any possible harmful effect which closer ties between China and the Soviet Union might have on Western interests.
6. Vietnamese refugees were a particular problem in Hong Kong. The numbers were now increasing again, and we needed urgently to look at ways in which refugees could be placed permanently in a number of other countries. countries had been very helpful and cooperative. Japan had so far done less than it might. We urged Japan to reconsider and take more refugees.
7. The patterns of economic development in Korea and Taiwan were changing. We were encouraged by Korean progress towards democratisation. It was equally important that Korea and Taiwan should be pressed to liberalise their
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CONFIDENTIAL
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