TNAG-2623-FCO40-3814-Visits-by-Alastair-Goodlad--Minister-of-State-for-Foreign-an-1992 — Page 41

On economic side growth surges ahead, on the back of massive investment from Hong Kong and others. Some signs of overheating: inflation probably now over

10%.

And China's success in exporting brings its own

problems: deficit with US now $13 billion, and not

much less with the EC.

US/China

This inevitably fuels pressures on MFN in the US. We

are watching very closely, ensuring that Congress

keeps the Hong Kong angle in mind. Ready to lobby at

the highest levels at the right time.

Mr. Clinton's policy a worry: he has linked MFN renewal to human rights, market access for US goods,

and cooperation of arms control. Little doubt that

if elected, Clinton would take a tougher line on

China.

Meanwhile, present Administration's relations with

China also entering choppier waters, with start of Section 301 action against Chinese imports, and sale

of F16s to Taiwan.

UK/China

Britain's relations with China dominated by Hong Kong. Always top priority when senior British Ministers meet Chinese counterparts. Programme of contacts now well developed. Douglas Hurd seeing Qian in New York on 25 September. Zhu Rongji due to visit UK in November. May be good timing if his star rises at Party Congress.