CONFIDENTIAL
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to carry on the dialogue with the Chinese on other international / regional issues of common concern eg Cambodia, Middle East, developments in the Soviet Union, Vietnamnese migrants;
Chinese Objectives
Li
We would expect the main Chinese objective to be to use the visit to affirm the diplomatic rehabilitation of China (and Li Peng personally) after Tiananmen. Peng will expect to receive an invitation to pay a return visit to Britain. We do not see how the Prime Minister could avoid issuing such an invitation without causing offence. But the invitation need not be time-specific, and the timing will lie in our hands. It is unlikely that Li Peng would risk proposing a visit to Europe until he had collected a number of invitations. The gesture is important: as long as Li Peng calls the shots on Hong Kong fruitful cooperation over the airport and other major issues will depend as much on his willingness to allow it as on written agreements.
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In addition the Chinese will no doubt also press us for new commitments on aid / soft credit and though less likely to complete the dismantling of the Madrid Measures (eg the ban on military sales). They may also seek our support for their re-admission to GATT and reiterate their opposition to Taiwan joining GATT before China's own re-admission.
Tactics
There is a strong case for telling the Chinese both in
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