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services as a whole. What was made quite clear to me is that relaxations ia recent months in our methods of dealing with Taiwan have found a genuine welcome amongst those lin authority there. I sensed a new warmth towards Britain which, if maintained, can lead to profitable business.
The following seemed to me matters either directly concerning British or more general which are preoccupying Taiwan's leaders for the moment (excluding, I should make clear, their domestic politics, which are more than usually turbulent at present).
The Mainland
I do not think I delude myself in thinking the Taiwan government are more relaxed and confident about the long term than I have previously found them to be. They seem to think that Beijing politics are set to develop in a generally rational and less hostile way and they seem less concerned about it anyway than when I have spoken to them before. They have set up the Straits Exchange Foundation (background attached) to deal with problems that arise from visitors to the mainland (2.9 million to date, with just 20,000 in the other direction): they clearly intend keeping the lid on mainland visits for the immediate future) and there are already more than 3000 firms in Taiwan who have invested across the Straits. I believe this Foundation will quickly grow in strength and influence.
World Trade
Here membership of the GATT is at the front of their minds and I have no doubt they will have a long memory for those who help and hinder them over this.
Europe
When first I visited Taipai three years ago I found myself proselitizing about the single market. Now it is very much in the minds of both the government and the business community and it is no longer a question of whether Taiwan will invest heavily in Europe but where and how much. In answer to my question I was told the needs of the Six Year Plan will not diminish Taiwain's zeal for investing abroad.
Protectionism
Where there is hesitation about Europe it concerns the fear of a world divided into protectionist blocs. The least convincing bit of the Six Year Plan which sees Taiwan's external surplus reduced to 0.5% of GNP in 1996 from 4.6% in 1991, was doubtless written in against the background of this fear.
CHLAKH
CONFIDENTIAL
/Bilateral
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