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035644 MDADAN 3901
BE SEEN AS FURTHER EVIDENCE OF OUR WILLINGNESS TO DEAL FIRMLY WITH THE CHINESE, AND TO AVOID BEING SEEN AS PUTTING OUR FEAR OF LOSING BUSINESS AHEAD OF MORAL AND POLITICAL OBLIGATIONS.
4. WHILE WE RECOGNISE THAT CANCELLATION RISKS SOME DAMAGE TO OUR TRADE RELATIONS WITH CHINA, OUR ASSESSMENT IS THAT THE EFFECTS
ARE LIKELY TO BE MINIMAL AND RESTRICTED TO THE SHORT TERM. MUCH OF THE EXHIBITION, BY ITS NATURE, WOULD BE UNLIKELY TO LEAD TO IMMEDIATE SALES. THE FINANCE SECTOR IN PARTICULAR MAY LOSE ITS
ANTICIPATED IMPACT AND MUCH OF ITS APPEAL TO EXHIBITORS AS A
RESULT OF THE CHINESE GOVERNMENT'S APPARENT REVERSION TO HARDER-LINE ECONOMIC POLICIES. FOOD PROCESSING AND
TELECOMMUNICATIONS IN NORMAL TIMES WOULD HAVE BEEN GOOD SECTORS FOR PUSHING BRITISH EXCELLENCE, BUT THE FACT IS THAT THE CHINESE ARE UNLIKELY TO OFFER FIRM CONTRACTS IN NOVEMBER WHICH WOULD NOT BE AVAILABLE THROUGH MORE DIRECT AND LESS PUBLICITY-SEEKING
METHODS.
5. A RECENT STATEMENT BY DENG XIAOPING INDICATES THAT GOVERNMENT ECONOMIC POLICY MAY WELL FOLLOW MORE TRADITIONAL LINES OF SOCIALIST CENTRAL PLANNING WITH A SLOW DOWN IN GROWTH. CHINESE IMPORT RESTRICTIONS ARE THUS LIKELY TO BE TIGHTENED IN THE SHORT TO MEDIUM TERM. UNDER THESE CIRCUMSTANCES THE IMMEDIATE COMMERCIAL OUTLOOK IN GENERAL IS BLEAK AND PROSPECTS FOR THIS EXHIBITION IN PARTICULAR ARE VERY POOR INDEED.
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6. IN SUM, THEREFORE AND ON THE ASSUMPTION THAT HRH'S VISIT WILL BE CANCELLED WE BELIEVE THAT IT WOULD BE INAPPROPRIATE TO
GO AHEAD WITH A HIGH PROFILE QUOTE BRITISH UNQUOTE EXHIBITION. WE STAND TO LOSE LITTLE IN TRADE TERMS AND OUR BROADER INTERESTS
WOULD BE BETTER SERVED BY ADVISING THE SBTC THAT WE SEE NO ADVANTAGE NOW IN HMG'S FINANCIAL SUPPORT FOR NOR GOOD PROSPECTS
FOR BUSINESS FROM THE FAIR.
7. WE HAVE ALSO TAKEN INTO ACCOUNT THE 48 GROUP MISSION TO THE PROVINCES AND PEKING SCHEDULED FOR OCTOBER. THIS ON BALANCE SHOULD GO AHEAD, AND MAY TO SOME EXTENT COMPENSATE FOR ANY POSSIBLE DAMAGE TO OUR TRADE PROSPECTS RESULTING FROM CANCELLATION OF THE EXHIBITION. THE MISSION ITSELF WILL NO DOUBT BE USED FOR PROPAGANDA PURPOSES BUT AT LEAST IT HAS A MUCH LOWER PROFILE, ESPECIALLY IF THE PEKING ELEMENT OF THE ITINERARY (25 - 28 OCTOBER) COULD BE CURTAILED. IN ANY CASE HMG SUPPORT IS MUCH LESS EVIDENT. IT WOULD PRESUMABLY BE VERY DIFFICULT TO PERSUADE THE 48 GROUP TO ABANDON THE MISSION ALTOGETHER GIVEN THEIR
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