FCO 21/96 Sino-British trade Riots

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FOREIGN OFFICE

CONFIDENTIAL

DEPT. FAR EASTERN

CHINA - ECONOMIC AFFAIRS

(EXTERNAL)

SINO -- BRITISH TRADE RELATIONS

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FC6/1

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CONFIDENTIAL

PART

1/673

RECEIVED IN

CHERN 3

1967

SMITISH TRADE

FC6/!

BY BAC RESTRICTED

IN HONGKONG

1 Junc, 1967

63)

(60

Mease refer to your letter of 22 May to Michael Hanıma enclosing the artiole on British Trade in Chirm.

Thank you for sending us the artiale but in view of the recent disturbances in the Colony and the points you ma's in your letter we think it better to oxit from the review of 3rdtain articles from yourself and from Forvosa.

I an sending copies of this letter to John Denson in Far stern Dept. and Dr. Russell at the Board of Trade and I am writing a similar lotter te Brereton.

MAG:Jm

(1. A. GOOD ELLOW)

Assistant Trade Commissioner

00. J. M

Denson, Esq. Far Eastern Dept.

Dr. I. Russell.

T. Peters, Esq., PELING.

Item

Enter

SB Sino - British Trade Council

中英貿易协会

President: Mr. John Keswick C.M.O.

The Association of British Chamber of Commerce

The Confederation of British Industry

The C

Association

The London Chamber

**FW/FEC

E.J. Sharland Esq., Far Eastern Departmenu,

.he Foreign Office, Downing Street, Whitehall.

5.4.1.

21 Tothill Street, London S.W.I Whitehall 6711

LF.

7th June, 1977

FC6/1

Dear Mr. Sharland

Thank you for your letter of the Sid June. This item in the minutes referred to the Agricultural Exhibition proposal and the idea was that through the British Agricultural Export Council we should invite Huang Wen-chun and one or two of his staff to the Royal Show and afterwords arrange a programie of visits to various Agricultural projects in the country. This would be a preparatory measure and the next stage would be tơ endeavour to get a team of Agricultural experts from China to visit this country in 173, The final stage would be the Agricultural Exhibition.

Since Huang Yen-clium has gone I doubt if it will be worth while trying to get his successor, Hou Ting-ching, interested in the progra:zio. For one thing it will be necessary to get to know him and then to try to gauge whether an invitation to a show or other agricultural station would be likely to be accepted.

Yours sincerely,

X.F. Webb Secretary-General

INU'

Mi pa.

Comp/2

E. Bolland, Esq.,

Norcogod.

ડી

F. O.

BOARD

FRADE

مسا

Covering Confidential

ofr Shorland

With the Compliments of the

CEIVED INsistant Secretary

ARCHIVES No.31

1 JUN 1967B. Mac Tavish

BOARD OF TRADE

$30

Commercial, Relations and Exports

ORE.1606/110

BY DIPLOMATIC AIR BAG

CONFIDENT TAL

BOARD OF TRADE,

(63)

1, Victoria Street, London, S. W. 1.

25th May, 1967.

FC6/2/11

Thank you for your letter of 26th April recording your in- pressions of your own visit to the Canton Spring Fair, and a further letter of the same date reporting John Keswick's experiences at the Fair.

2. It seems clear from these letters and from Peter Marshall's own report which has now been circulated to the Executive Council of the 8.3.7.C.. that the opportunities of engaging the Chinese authorities and trading concern brious discussions on trade natters_ara_getting steadily more limited, and that so long as the Cultural Revolution purjush its current course any contacts are likely to be restricted to those necessary for the conduct of day to day business. Against this background it is all the more sur- prising not to say encouraging that our trade with China so far this year has been keeping up so well both in exports to China and in importa from her.

3. When we discussed trading prospects for 1967 just before your return to Peking, it is true that we concluded that trade in 1967 would probably be reasonably in line with that for 1966, but that trade for 1968 could well show a marked decline, as present major plant contracts were completed and as the Chinese themselves found increasing difficulties in producing and shipping exportable sur- pluses. The latter may not be ablể tỏ happen, since Peter Marshall reports that the Chinese have been quoting long delivery dates for their exports; but so far as our own exports to China are concerned we appear for the time being to be making up in increased shipments of non-capital goods anything we may be losing in the way of decreasing shipments of some types of capital equipment. Never- theless the pipeline of sador capital projecta in hand is steadily emptying, and unless there are some substantial orders placed fainly soon (which seens unlikely) it seems inevitable that our total exports will begin to turn down before many months elapse.

4 So far at any rate, our om attitude towards trade with China remains "business as much as possible as usual", Recent disturbances in Peking, Shanghai and Hong Kong make this a somewhat difficult line to hold, though the general concensus of opinion of those people we talked to at yesterday's reception given by the China Association was that H..G. should parsist in this despite Chinese provocations.

5. We shall doubtless hear more of this at next Thursday's meeting of the Executive Council of the 8.B.T.C., and I will report to you what is said there. In the meantine 1 an enclosing for your infor- mation a copy of Peter Marshall's report on the Canton Trade Fair,

/ notes

T. Peters, Esq.,

British Embassy,

Pering.

COEPIDI

CONFIDENTI

notes of the two meetings which Keswick had with the ghinese during his own visit to Canton, as well as a copy of Keswick's letter to Macliahon of 22nd May.

6. I am sending a copy of this letter without enclosures to Bolland in the Foreign Office.

(B. MacTavish)

J. Sharland, Esq., Far Eastern Department Boreign Office.

Enter

Comp/29

RECEIVED IN

With the ComplimenARCHIVES No.31

- 1 JUN 1967

A.K. Rogora

BOARD OF TRADE

FCG/1

CRE/311/66

COMPIDENTIA

B.P.0. AIR BAG

(62)

Commercial Relations & Exports Department

75th Voy, 1967

I am most grateful to you and Thoe ister: for your series of letters about the various complete plant projects eta, received bere by the last bag.

2. Unfortins taly I have little to report by this bag, so I will make this a mixed letter. Plessays have not yet decided win t they would like you to do. It might, in any event, be extreroly diffle it for you to do anything at the present time. Flessays would not bo sorry if the Chinese broke the contract, Unless, however, things develope vary seriously on the political fron I cannot see this happening. Argwy, I will let you know as soon as practically possible ubat the next move night be.

We have invited Jay of Vickers-Zimmer to come and see us. He agreed to do so when first saked but he telephoned me in sons agitation yesterday to tell me about the imminent departure from Lendon of Huang Wen-chun and Sun Shi-wei. Vickers have a working model of their plɛnt and had invited Huang and gun to have a look at it. This had been fixed for today (25th). Huang, however, had to try off because he "had to return to Pking to join the Cultural Revolution" He did not know when he would return to

the U.K. or who would replace him. Then paket by Jy who could visit Vickers in his place Hazng is reported saying that if no one was able to do so within the next 3 or ↳ wicks then iokers might as well forget about it. He had alreedy heard from other sources that it looked as if Huang might be on the move. To what extent this is tied up with recent happenings it is not for me to a y and comment would, I think, be a little prenu tire, * am, however, copying this letter to John Sharland at the Poreign Office who might, in due course, be able to expand on the movements of Chinese from London,

-FC 6/5/7

4. We thought that our GREDA 17 about stale and Silcook of Sinen-Carven we necessay in view of the extreme difficulties you were experiencing last week. Huang bed advised Dickson of simon Carves that an attempt by the engineers of physioṛl contect with you in Peking was inadvisable, I understand that they both arrived safely and I hope that they managed to at le st tel:phone you

Te attended the Chim Association annual reception last night, No Chinese were present. A muber of people, including shipping people, reported that tradé wa brisk and in feet Thomas of McGregor

SPIĆ was, it had never been better. There appeared to be little spressžem: abafe teammanaging crisis and that if we continued to "play 36.sani.we would come through,

A.J. Hunter, Esq.,

First Secretary (Commercial),

PEKING.

6. You will doubtless de reporting shen d if you are able to do so about the effects on trade that present cventa are likely to have - a difficult if not impossible task. CUP thoughts are very much with you.

(A.K. Rogora)

Ed (1625)

Flag

Below

CONFIDENTIAL

Reference.

F26/1 (w.61

kr. Sharland

Far Eastern Department

-/61.

Mr. Peters' letter of 23 May at

Although Mr. Perry is still with the London Export Corporation, Mr. Buckman quarrelled with his fellow directors in the L.E.C. and appears to have resigned in about February. Mr. Buckman has set up his own company under the name Buckman Import-Export Company Ltd., 33 Beaumont Street, W.1 (he is Managing Director) to trade in non-ferrous metals.

We have not heard anything to confirm that an officer of the 48 Group will be going to Peking shortly although Mrs. Joan Robinson, who is involved with them, is believed to be trying to get there in the autumn.

12. Dawsey

ikkeamen

(P. McKearney)

17 July, 1967

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Draft ķ Mr

ķ Mr Perri

Draft litter attached

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My som

Msmartani

Atharland

CONFIDENTIAL

가

This might indicate

CONFIDENTIAL

Swing Yow and the 48 trumpe

We should warm with B17

(11240)

எ

Office of the British

Charge d'Affaires,

PEKING.

RECEIVED :.

23 May, 1967

ARCHIVES No.3:

1 JUN 1967

C6/1

зор то бегаданий Shartain

Dear John,

Ema

FCG

In Canton at the opening of the Fair there was much talk among the British contingent about the recent split in the London Export Corporation, about which you may already have heard. It appears that Buckman, one of the Directors whom we suspect of being well to the left, has left the Corporation and intends to continue doing business with China on his own (or possibly in association with his Canadian brother, who trades with North Vietnam among other countries). Buckman was expected to come to the Fair and introduce himself to the Chinese in his new capacity; but he did not turn up while we were there.

One rumour said that Jack Perry had also split off from L.E.C., but there is very little information to confirm this.

•

3. Possibly in order to reinforce L.E.C.'s image in the light of thie split, the Corporation had a stronger delegation at the Fair than usual. It numbered four people, and was led by Silver. Silver was also acting as co-ordinator at the Fair for the 48 Group

He may have arranged an interview for group members with Lu Hst-chang, and certainly organised a dinner attended by all Group members at the Fair at which Lu He-chang and other senior Chinese officials were also present. I have already reported that this dinner is supposed to have been a great success. (y letter 1863 of 20 Lay to Kefavish refers).

FC6/2/13

John Little of J.H. Little & Co. is now in Peking and he tells ne that the Metals and Minerals Corporation have explained that they wish to buy from him because his company is a member of the 48 Group. He was also told that the Chinese had gummoned an officer from this Group to Peking for discussions. When he tried to probe more about this, they became evasive and said that they had only suggested that someone from the Group might like to come here. They also said that the 48 Group might be invited to send a selling mission here later this year. You will remember that we have already had Jack Perry and Roland Berger in Peking this year,

5. Little, who has been keeping in touch with us daily during the demonstrations and who pushed through the mob to call on the Minister on 16 May, has also given me some information about Gert Hauch, Deputy General Manager of olfr & Co. of Hochstrasse 56, Frankfurt-am- Kain. I had met him in Canton and had decided for myself that he was a slippery customer. Little confirms that Hauch has a finger in every pie and that he has excellent connections with the Chinese in Poking. Hauch claims that the Chinese have told him this week that they have still not decided if they will send buying missions to Europe this summer but that if they do the missions would certainly visit the U.K. and West Germany.

I am sending a copy of this let Trade.

Your twe

(T. Peters) Counsellor (Commercial)

J.B. Denson, 284., 0.3.,

Far Eastern Department.

CONFIDENTIAL

McTavish at the Board of

во

CONFIDENTIAL (1676)

J.B. Denson, Esq., 0.B.E., Far Eastern Department.

My. Short and

Entel

With the compliments of

THE COUNSELLOR (COMMERCIAL)

RECE

ARCHIVES 190,5:

= 1 JUN 1967

FC6/1

THE OFFICE OF

THE BRITISH CHARGÉ D'AFFAIRES

PEKING

22 May, 1967

Res

(1676)

CONFIDENTIAL

off

Office of the British

Charge d'Affaires,

PEKING.

22 May, 1967

NR FO.

I enclose now a brief article on British trade in China in response to your circular letter 1/475 of 7 March. This was prepared before the current crisis. I think that if you want to use this piece it should be anonymous, 1.e. no attribution to this office. Even then I think that it would be impossible for us to agree to its use if the supplement is going to include a piece about Formosa. The Chinese would assume that the article had come from official sources.

I am sending copies of this letter, and enclosure, to John Tenson in Far Eastern Department and Dr. Russell at the Board of Trade.

(T. Peters)

Counsellor (Commercial)

M.P.V. Hannan, Esq., British Trade Commission, HONG KONG

CONFIDENTIAL

DRAFT

British traders were among the first Westerners to resumƏ

business with China after the formation of the People's Republic in

1949. After the break with Russia in 1959 the Chinese diverted more

of their trade to heatern countries, and since then the volume of

Sino-British trade has risen steadily. In 1966 the two-way total

was over £65 million.

The balance of this trade has been consistently in favour of

the Chinese, though in recent years the gap has been closing steadily. Britain has provided a steady market for the traditional Chinese

exports agricultural produce, furs and skins, ores, objets d'art etc. Since the Spring of 1957, the principal forum for the sale of such itens is the Canton Export Fair, which takes place for a month at a time in the Spring and Autumn of each year, and attracts businessmen from many countries. Some 70 British businessmen usually visit the Fair, including sany regular visitors who specialise in trade with

Chine.

British exports to China are mostly in the fields of technology and engineering, though they also include steel, chemicals, textile fibres and even sheep and pigs for breeding purposes. British instruments have proved particularly popular with the Chinese, and the Scientific Instrument Kamufacturers' Association, besides staging exhibitions in China in 1964 and 1966, has increased its business dramatically to a currant total of over £4 million a year. There have also been a number of British complete plant sales. Those successfully completed include a synthetic ammonia plant which went into operation in mid-1966, and three British companies are currently contributing separate plants to the new petrochemical complex at Lanchow.

}

FC 6/1

FOREIGN OFFICE, S.#.1.

2 June, 1967.

Please refer to your letter reference NPW/FEC of 5 April to Mr. Hoss about the idea of a series of visits by Huang Wen- chun and his staff during this year.

I should be most grateful if you would let me know of the progress of this idea, which, I imagine, may now be running into opposition from the Chinese side.

W. F. Webb Esq.,

The Secretary General,

(E. J. Shapland) Far Eastern Departzent

Sino-British Trade Council,

21 Tothill Street,

London, S.W.1.

NOTHING TO BE WRITTEN IN THIS MARGIN

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Issued by the Sino-British Trade Council,

-16 JUNI~!

the officially recognised body for the promotion of Sino-British Trade

TC Sino-British Trade

Jan./March (in £'008)

Provisional figures for United Kingdom trade with China for March and the year to date are as follows:

Jan/March

March

Imports from China

£2.969 £8,924

£9,801

Exports to China

5,420

9,982

7,042

The excellent figure for March exports presumably contains an item for the first vessel delivered to China by Messrs. Doxfords, but even allowing for this the trend is encouraging.

U.K.-China Trade

Jan./Feb. (in £'000)

Feb.

Jan/Feb. Jan/Feb.

1947

1944

Imports from China

£2,800 £5,780

£7,095

Exports to China

1,914

4,562

4.469

April 1967 No. 31

•

Commentary on Jan./Feb.

Chemicals maintain their good export performance and, to a lesser extent, dye- ing, tanning and colouring materials and plastics. The increase in non- metallic mineral exports is due to re- fined copper.

Plastic working machinery and moulding boxes for metal foundry show useful increases in the non-electric machinery group. There were lesser exports than average during February of textile fibres, iron

The

ino-British Trade Council k

A report of the launching of M.S. Jinsha at Doxford's Yard, Wearside, was carried in our March lase.

nsored by: The Association of British Chamber of Comman

London Chamber of Commerce,

Ins Association, The Confederation of Britich Industry und

and stool, electrical machinery and

scientific Instruments.

GROUP TOTALS FOR JANUARY/FEBRUARY

Imports were again down during the U.K. Imports from China (in £,000) month, particularly cotton seed oil, hide and skins, wool, tin and tag. There were increases in the case of asthment, oil seeds, chemicals and basketware.

Our re-exports to Chim, rose from 950,000 in 1965 to 21,506,000 in 1966. A surprisingly large number of small Heme are involved, but the following are the larger ones (in E sterling): Frozen egg

blocker 17,266, Mica £146,866, Chemical elements and com- pounds 114,374 (of which lodine

12.175, 95,064). Sandalwood ferous motala 1,012,960 (of which Copper 668,600, Aluminium 18,130. Land 19,000, Zinc 305,975), Noa- electric machinery 109,917 (of which compressar part 14,100 and contri.

+000

Mext and Preparations

Dairy products Fish producti Cerezka

Jan/Feb Jan/Feb

INT

1966

including rabbit

195

146

tinned pork

116

105

123

145

133

Fruit and vegetables

168

145

Tea and Cocoa and prepar

132

258

including cocoa butter

101

锕

126

Hides and

Oll seeds

fag 91,702), Electric machinery 33,622 Textile llibres (of which X-ray apparatus 24,871, Pro- fessional and scientide instrument 23,481).

HM. Government is stated to have

given consent, through the Ministry of Crude materials

Technology, to an order for a £500,000

British computer system to be supplied

to China by International Computers Vegetable oils

and Tabulator. The equipment in commercial system capable of under. making multi-programming, and expected to be delivered soon

• A Time report says that Steel Supply (Western) of Swansea has con- tracted to ship to China 10,000 tons of ferrous scrap at about £10 per ton China in majd so be in the market for suberantal tonnages of steel scrap and also interested in burying ships for breaking up

Chemical comporada

348

including groundnuts

102

castor of seeds

125

929

1.212

including raw silk

174

sheeps and lambs wool

cashmere

826

Metallferoes ores and scrap

260

including tungsten

206

including bristles

248

1.748

including cotton seed

193

1,693

castor oi

tung od

191

137

including menthol

Chemical material, naz

117

including rosin

100

0.4.

163

142

746

678

including gray unbleached

394

380

carpets

156

166

120

Including bismuth

110

112

TOTAL

570

7,095

For skies Plywood

Paper Textiles

This was followed by an Economist... Potky and gå report that China has bought nearly 2-Now-ferrom meta mill. worth (100,000 too) of Iron and

Heel scrap during the last two monthu

and is magse to boy

more if export

licenow an avalabla. Most of this is thought to be for the Vost plant in Tairana.

Livemack to Chloe

Blue Ponsel and Glen Line who have maintained regular liner services to the People's Republic of China since 1952 are playing their part in the carriage of

the suddenly booming trade in livestock. Blog Punnel have carried (77 pigs this your of which 117 woen shipped in April in "Menesthaus" and "Automedon."

They and the Glen Line will also take part in the movement of a total of 219 sheep from the UK. in Shanghai in May and June,

She British Trade Roder

GROUP TOTALS FOR JANUARY/FEBRUARY

U.K. Exports to China (in £,000)

1966

511

Denmark

Encouraging reports have been received regarding the success of the Danish exhibition held in Peking in March. The number stlending exceeded expectations and were mainly people with a technical background. 72 coming from all over China. About *

three quarters of the exhibits were sold.

• Danish exports to China in 1966 were 10.89 mil. and imports £4.21 mil.

ingapore

Jan/Feb Jan/Feb

Textile Obres Chemienis

197 328

617

Dyeing, Tanning and cleaning mat's Plastic materials

154

Chem. mats and products mes

170

Textile yarn, &c.

200

118

Non-metallic mineral vastuufs.

112

Iron and Steel

835

1,228

Non-ferrous metal

305

Machinery non-electric

1,010

940

Machinery electric

276

341

Transport equip,

134

163

Professional and scientific

371

474

International Trade

We have extracted from Tattersalis Quarterly Textiles Review the insports of plece gonds from China of those countries for which returns are avail- able. There

bot yet sufficient figures for 1966 to produce a close estimate. No figures are available for any Communist country, and the USSR in particular has in the past been a large buyer.

1965 recorded imports of cotton piece goods from Chion were 590 mail, sq, yás. Taking the value of imports of Hong Kong as a basis, the total value of this yardage is about £36 mil. Principal Importers were Indonesia 240 mil. sq. yds, Hong Kong 216 mil., Malaysia 44 mil.. Ceylon 33 mil.. Nigeria 27 mil. (ASE), UK. 34 mb.

Imports of man-made fibre fabrics by the same countries totalled 80 mil, sq. ydk.

For Curr

Hong Kong imports from China rose from £23.2 mil. for Jan/Feb. 1966 to £30.5 ml, during the first two months of 1967. The largest increase in in Textile yam, fabrics, etc.. which contra- dicts reports from Japan of a shortage of Chinese Textiles. Apart from slight decreases in live animals and sugar, ime ports of almost all other food and agricultural products show increases.

TOTAL

Philippines

The Chamber of Commerce of the Philippines is expected to send a trade mission to Canton during the course of the Trade Fair, in a private capacity, to investigate trading possibilities. There has hitherto been no direct inde be- tween the two countries but Manila was recently considering the purchase of rice from China in order to allevi ate its shortage.

Лирил

Japanese stoel exports predict that sales to China will increase rapidly in the next two or three years and that they may well exceed one million tona during the period, provided that Japan increases its imports of coal and ora from China. They say that his dim- cult to pin point the reason for the increase in Chinese demands, although steel tube for oil driting is a special need

Wasal Bussna Co. of Tokyo, is reported to have received in order for 10.000 tons of fertilizer. nature con- stated, costing £130.000.

The International Trade Promotion of Japan states that basic agresonont has been reached for the building of permanent trade exhibition houses in Peking and Tokyo.

The Singapore Chamber of Com merce in its Annual Report said that China increased its purchases of rubber from Malaysia from 13,475 tune in 1965 to 90,350 tons in 1966. The report believes that this increase is in part due to smaller purchases by China from Indonesia

East Germany

A trade and payments agreement for 1967 with the East German Republic was signed in Paking on April 14th. The agreement provides for some in- crease over 1966.

Wes GermaŲ

Reports atributed to Bonn say that talks on the construction of a large steel rolling mill for which West Germany www reported to have guaranteed a credit of DM 300 mil last year, are to start in mid-April. It is mid that the initial capacity is to be 3 mil. tank. rising later to 6 mil. A trade delegation specialising in stoel passed through Hong Kong route to Peking at the end of March.

West

The principal items of Genman exports of £46 mil to China in 1966 were copper £5,7 mil, fron and meel sheet £2.1 mil. steel tubes £2.6

SUBSCRIPTION RATES

Subscription for 12 consecutiva famosa

SINO-BRITISH TRADE COUNCIL

21 Tethill Street, London, SWGI

Tal. Whkabel BI

mě, machine tools £2.7 mil. power machinery 21 mil, other machinery £5.1 mil.

A report on Pakistan's food grain sitation says that China has agreed to supply 500,000 tons of wheat and 50,000 ton of rice to be paid out of the balance of the interest free Jown equivalent to 560 mil 20,000 tons of rice la being shipped to Napul.

France

Paris radio announced on March 23rd That Francs had contracted to soll 15 Alouette (11 bolicopters to China for 20 mil francs, the order to be com. plated by the and of 1967. This was fest reported in our Fabroury jeste.

Industry

Reports from major industrial areas give a picture of deady advance in i dustrial production in the first quarter of this year. The increase for Shanghai a reported to be 3.4% during January and February, and for Tringtao 29% in the first quarte. The output of the Tsingtao wool mill, which produce shaped steel, stoel sheets and tubing. had dropped to the lowest point in history just prior to the seizure of power, but more than achieved in burges for the first quarter.

• A new high precision automatic machine for printing high quality colour pictures has been put into operation in the printing house of the Chinese Academy of Sciences. The machine prepares an one day four colour pictures which took more than two weeks of dan hand engraving process previously

used.

• The Far Eastern Economic Review of March 30th in a special section antilled Camera is Asla describes the

Caba

A Sino Cuban trade protocol for 1967 was signed in Peking on March 20th. China is to supply rice, soya beans, lard. canned pork, cloth, rolled steel, machinery, instruments, chemicals and pharmaceuticals, etc... Cuba will furnish sugar, mineral and other products.

The Rumanian stale company. Auto Tractor has recently sent a number of S.R. 132 Carpati korries to Chọna,

Mongoli

A trade protocol between China, and the People's Republic of Mongola was sgoed in March.

Reference a made to the produc- tion of diesel engines by the Inser Mongolia Engine Plant, the report emanating from Hubchat, and to the Lanchow Railway Bureau's vehicle wheel plant at Landsi

The January issue of China Recon- structs carries a photograph of the platforming unit at the Taching Oil Field and one of the plant for the manufacture of banzine. There is also an article on the natural gas explosion and fire which occurred last June fa the course of preparations for a shut in pressure test.

The Far Eastern Economie Review of April 13th carrier a series of articles under the heading "Automobiles for Ass. The section on China describes the types of vehicle now be ing produced and mentions the known production and assembly plants. deplores the lack of statistical informe tion on this subject.

various types of Chinese car and Agriculture

accesorios being sold in the Hong Kong market. Imports of Chinese elmers to Hong Kong in 1966 were 5.857 units valued at HK$425,000 (£27,000).

A new medium sized open cist coal mine has started production in Honan. Design and equipment is of

domestic

On March 20th Premier Chou En Lai addressed a group of pesant fumes on the tacks of Spring farmers. He told them that there would be "no seizure of power among production teams and brigades." This presumably means that the cultural revolution is to be suspended in farming organisations

The following table gives ship- ments of wheat to China for 1965 and 1966 which is believed to be complete except for December shipments from Argentina.

Tons thousa

1965

1966

Canada Australia France

1,534

2,845

2.733

1,505

Argentina

Total

1,358

1:0 1,522

5.637

5,982

Stupments in 1964 were 4,953,000 tons Imports of rice from China as declared by most buying coUN- tries were 523,000 tons in 1965 of which 432,700 were reported in the first three quarters. Imports for the first three quarters of 1966 were 682,600 tons and incomplete returns for the fourth quarter came to 43,000 tons, giving a minimum of 725,600 tons for the year. None of these figures include import by Cuba, for which the contracted quantities were reported to be 250,000 come 1965 and 130,000 tona 1966.

in order not to prejudice apricultural work A similar stainment was made by the authorities in Shensi

A report from Harbin describes the subjects discussed at a Conference on the cars, protection and transport of food grain. It points out thai Heilung- thing had an excellent harvest fast year and that the amount of food grain going into granaries was the highest on record. Stress was laid on the import- ance of airing and drying grain to bring it to a saČe molature content and on taking care of it in store and transport thereafter, the implication being that there have been inadequacies in these respects. There is apparently a need for grain drying equipment, and for means of protection from infestation there. ofter.

A report from Wuhan mys that in order to encourage the development of pain, potion and other industrial crops, and acting on the instructions from the State Commal, the pro- procurement deposits for 12 major

Bettiah Trade Review

agricultural and side line products have been paid out two months earlier than in previous years.

Canton radio reports that a severe drought is threatening spring crops step areas of Kwanghung. This is bon but by the lack of rain in Hong Kong whore water supply restrictions have been reintroduced.

However, bowry main fell in Kwang- ting at the beginning of Apell in suli- cient quantities to alleviate or alimin. ate the drought conditions which have persisted for some months past.

• Peking reports on March 20th that 100,000 toms of chemical fertilizer had

impression is that a good deal of capital will be spent on mechanisation and fertilizers in the next two years, and that much attention will be paid to research. He thought that there would

be demand for tractors in the 60 to

80 h.p. range and that it would not be long before mechanical harvesters and the like were required.

The Baltic Exchange reports recent charters by China for fertilizer cargoes from Europe at around 90/- May/June. This will make the price of sulphate of ammonia about £14-10-0 per ton CIF China ports

been sent to communes on the outskirts Domestic

of the city since the beginning of this year.

• Mr. Dennis Boyle, of B.M.C. Export Ltd., a specialist in farm mechanimation, has recently spent mont time in Hong Kong discussing China's plans for agriculture with Chinese His outmanding

representatives there.

A report from Wuhan states that the Peking Canton railway Wak cleared for trade from Murch Sch.

A broadcast from Shanghai Da April 16th carried a report from the Weo Hai Pao maying that "in the harbour and on the wharves of Shang-

The Kwangchow (Canton) Fair

from P. 5. Markal

NOTE : in this publication, we normally try lo remain aloof from political jasusa, whila carrying out our main task of promoting trade and understanding betweed out two countries. However, we are secured by Chinese collegue that it is essential st time to urge all burnommen lọ attain madamtanding of the pressat situation. Chins, sinos it most stringly affects work the Casson Fair, business relations, and mspects of trading and production.

El sekta appropriate therefor, la preface pur account of the fair with a powibly loadequate, but sincere attempt to explain the background as well as the exhibits. This should not be taken to mean that we hav bosome political,

In passing, we note that the fair in renamed KWANGCROW FAIR and should be sou

POLITICS IN COMMAND.

In the current phases of the confies between the two Bone," the left-wing proletarian organizations are actively kaking themselves into a close alfiner to finally defist and out from their positions, adherents of the rightist Ban, and to anime power and control in every organisation throughout the country.

During this period of cellclay and tee of the rightist Timm, and individual

olacea connected with it, and seizure of power. by the lot, Cadres in all organisations are ad to stop forward bravely - despite any hardships they may recently have endured and with the revolutionary students, to form a grand alliance with peasant and worker proletarian revolutionary orgaolucions. poned by local andy vals. The revolucion

work

of all work, while askerke do the lala and increase prosvetion, work wimbier revolucizi weken

It is unclpssed, that the revolutions Forvour now abroad will stimulate a long agricultural and industrial production, think it is possible to pousse the twin objectiv of Incrossed production, and saimen of wwww, slemaltinuously. As production incromes, it is anticipated that it will bring about inermined foreign trade.

BUSINESS AND REVOLUTION

In its outward mondatoties, a ten becomes aware of the present zapsa ekopaiga, in several ways. z

Betons dicussions now are with deep polkien) diversions, designed to divory that everyone has understanding of the hun at strike la and the signideance of the seizure of pow by the Proletaria Left, now following line, advocated by Chainman Mo, applying his thought in all maka.

bai there now exists a great congestion of goods which a seriously affecting the distribution of goods in the nation." Efforts to reduce the congestion have been affected by long periods of ruin

• The Shanghai Municipal authorities have issued regulations for the control of motor vehicles, since "a large number of motor vehicles were widely scattered or lost" during recent political disturbances.

The French Prem reports that China has been trying to recruit sero- nautical engineers and technicians in West Germany.

• It is reported that Bong has been holding conversations with the authorl- tios in Peking for the installation of telephonic communications between the two countries.

The Foreign Ministry in Bonn have, densed reports that secret negotiations have been making place between Bonn and Peking concerning the exchange of trade missions.

This political manjar is not always sadly grasped, and the sessions are long and lively.

cand representarines of the renalan manzana, jeho sir in alan, combine bieten wirk

sadnical work thronghout the day.

The loudspeakers in the ball are in mo much of the time to sasiet this political work, and it must be admitted that at times, both sides to say business discussion often find it difficult to hate each others words.

Having said that, let

drical work are

The Proletarian revolutionary are strongly reflected also in the Arrang of the Milk, and the scibile themelue There is in each section, a revolutionary chleau, centred on a bus de Hatua ĐẾ Chaizean Man, and linked to li, are barna, and often very interesting pictures on the twis

nuvolation. of production

The fair bol

now used alo porniment exhibition of China's incata in science and industry. Not mhibits therefor, are samples of For

This can be somewhat confusing fest, particularly in the machinery section, and il would help foreign buyers if schievo- ment exhibebi, not offered for sale, were Taboliad

Sino-British Trade Rew

THE EXHIBITS

The Cereals, Oils and Foodstuffs Corpora- tion still has the most attractive section

possibly because the products shown, being concerned with man's most basic need, most readily give the impression of abundance in a mass display, and attract by their natural colours, and connections with eating. Pulse and different grains fill the wall cabinets, beneath sheaves of wheat and rice, peanuts, etc. Another attractive feature is the display of oils extracted from them. Two oils which I have not previously seen here, are small apple oil, and rubberseed oil.

The Chemicals section, which includes medical apparatus and instruments, once again shows autoclaves, X-ray apparatus, surgical instruments and rubber products, around a centre piece which includes a laboratory model and other items connected with the work of Chinese scientists in pro- ducing crystalline insulin. The range of sulphonamides, vitamins and antibiotics is impressive also. This show of advanced products resulting from the efforts of scientists in both pure and applied chemistry, shows also something of the wide range covered by their work. New products may be seen in all sectors; new chemicals, dyestuffs, and pharmaceuti- cals lead one's eye along to the display of oil industry products. Here are shown the lubricating grease and petroleum jelly seen at previous lairs, plus later products such as calcium-based, aluminium sodium lithium and calcium sodium based greases; white oils, grades A & B; fatty alcohol; synthetic fatty unsaponifiable matter; and black grease for locomotives. Oils now include light diesel, vacuum pump oil, diffusion pump oil; condenser oil; aviation lubricating oil; aviation hydraulic oil; jet lubricating oil; instrument - and precision instrument oil. Jet fuel, aviation gasoline and no. 85 Gasoline in plastic carboys complete this show of impressive progress in these industries,

The Textiles section contained the new mixtures seen at recent fairs, and garments much as before. However, under the stimulus of the Cultural Revolution, many brocades etc., in traditional designs, have been re- designed with considerable skill. Colour and general design are similar to the original, but outdated* motifs such as good-luck flying bats, have been replaced by tiny crossed ping-pong bats and balls etc. One sees the reason for the changes, but some buyers are worried about this tendency. Many of them supply customers who make-up articles covered in these materials, and though the merchant may like them, it is not yet certain that the end-user necessarily will. Where this is so, merchants may be driven to purchase in Hong Kong or elsewhere, in order to keep their own customers.

The same trend exists throughout the Arts and Crafts section also, and similar difficulties occasionally affect our buyers. It should be repeated that we all understand the en- thusiasm behind these changes, nevertheless, it remains true that it is the foreign buyer who has the difficult task of persuading overseas customers to buy the new designs rather than the old.

Not every potential purchaser abroad will accept a figure of a militia girl carrying a weapon, in place of the Kuan Yin

or classical figure he really wanted for his home. If the customer insists, the merchant must look for a supplier in Hong Kong. - or Japan, and China will lose Singapore some trade which otherwise would be hers. and which traditionally, is bers.

The Light Industrial Section, as always, was full of interest. The range and variety of electrical equipment is slowly broadening. There are now some 10 different types of 8 transistor radios, a tape recorder was shown, and electricity showrooms' products now include an electric rice-cooker, toasters, new light-sources, bucket immersion heaters, electric clocks, plus the refrigerator and washing machines previously seen.

Film studio and projection equipment, and an enlarger join the widening range of cameras, film and photographic papers.

Kitchenware now includes wall-hanging tools, coffee pots, a very full range of alu- minium ware up to large catering sizes, more shapes and new patterns in strong, decorated enamelware, and additional kitchen aids of the mincer type. One such is a noodle-rolling machine, which produces noodles of the correct thickness about 20 at a time, from flat dough.

Newer trends are evident in the design of bathroom fittings and hardware, and in electric fittings. Flush fitting Italian-type

wall switches are included in the range of older design plugs, sockets, adaptors, etc., and all sanitary ware is now ultra modern and slim-line; pedestal washbasins, bidets, baths and low suites are available in all the soft modern colours. The range of window glass and building board is increased also.

In this section were two photocopiers, unfortunately closed but seemingly a wet process.

It would require too much space to list all the new products, but brief mention must be made of the following.

Machinery: exhibits, apparently not for sale, included the new double-column jig- borer, the Red Banner sedan with 8-cylinder v-type engine, and a 6-spindle automatic turret lathe. There is more printing machinery now including book stitcher and guillotine; more sawmill equipment, including a spindle side-moulder, a thicknesser, and a small sawbench; and more crop-processing, oil- pressing and plastics machinery, including a tubular- film unit for polythene. Air- conditioning and refrigeration equipment were also shown.

A crawler-, and 4-wheeled tractor stood by the 5 h.p. version of the now popular

· Worker-Peasant' land tractor in the yard outside, but unfortunately it was not possible to see the range of drawn-tools and attach- ments these now employ.

To revert to foodstuffs, fresh eggs are now packed in 360-egg corrugated and cardboard containers, and yolk and eggwhite, in 20 kg. tins within a cardboard pack. Sweets, biscuits, tea etc., all show new packaging, and are very attractive. Chocolate and sweets are packed in slabs, pastille-tubes, tins and boxes of wide variety; including new pocket packs as dispensed by railway station machines.

There was a wide range of canned fish products packed at Shanghai, Tsingtao, Dairen, Canton, Amoy, Swatow, etc., and it is obvious that this is a growing industry in China.

Bottled and canned juices, fruits and vegetables look most attractive throughout, and all are in modern packs. Dairy p included milk, condensed from Canto, powdered from Shanghai,

cts

And

The increasing range of meat products many of them new - included frozen chicken pieces, canned pork products from Shanghai, Fukien, Kwangsi, Kunming, etc., as well as a very eye-catching 3203 square can for pork loin from Tientsin. Canned soups are now available. Mutton was being canned in Tientsin and Tsingtao, and beef in several forms came from Tientsin, Dairen and Tsingtao. Spring rolls in a flat 1203 can made an attractive pack, as did many in the Famous Chinese Dishes Series. There is no doubt that the food industry in China is modern in approach, and increasingly well- equipped. Labelling now will stand up to competition on any grocer's shelves.

The second article on the fair, with later notes written after the closing ceremony, will appear in our next issue. I shall have something to say on new animal feedstuffs and compounding, cigarette and rope manufacture, instruments, etc.

In the meantime, from all the 40-50 British companies represented here, I ask you please to reply promptly to any telegrams and enquiries they send!

S.B.T.C. Affairs

Mr. JOHN KESWICK, C.M.G., President of S.B.T.C., and Peter Marshall were received by Mr. Lu Shu CHANG, Vice-Minister of Foreign Trade, and Mr. TAN TING-TUNG, Deputy-Chairman of the Fair Organising Committee, and acting Governor of Kwangtung Province, on April 20th.

Mr. Keswick gave a dinner in honour of the Fair Organising Committee and the Corporations, on April 19th.

Late Item

Messrs. Berk Ltd., have received an order worth £500,000 from the People's Republic of China for the supply of Agricultural Chemicals. A spokesman for the group stated it was the largest order so far received by the firm from China.

Printed by Rawlings & Watch Lid., Chertsey

Surrey

FC6/1

ら

:315

FOREIGN OFFICE, 8.#.1.

23 May, 1967.

Dear Sir,

Thank you for your letter reference NFW/PEC of 15 May to Mr. Moss about the special meeting of the Executive Council, which has been arranged for 11.30 a.m. on Thursday, 1 June at the offices of Matheson & Company.

I have now taken over Mr. Moss' deek and would be happy to attend the meeting if you would confirm that I will be welcome in fr. Hoss' place.

N. F. Webb Esq.,

(K. J. Sharland) Far Eastern Department

The Secretary-General,

Sino-British Trade Council,

21 Tothill Street,

S.W.1.

SB Sino - British Trade Council

Enter

中英贸易协会

President; Mr. John Keswick C.M.G.

חילי

The Asociation of British Chan.ben of Commerce The Confederation of British Industry

The China Asocution

The London Chamber of Commerce

NFW/FEC

Executive Council, Copy to President.

21 Tothill Street, London S.W.1 Whitehall 6711

15th May, 1967

ARCHIVES No.31

1 6 MAY 1967

FCG/1

Dear

th. Moss,

A special meeting of the Executive Council has been arranged for 11.30 a.m. on Thursday the 1st June at the offices of Matheson & Co. This is to enable menbers to hoar from the President and Mr. Marshall their impressione and comments on the Canton Fair and the general situation.

Will you please let me know if you will be able to bo present.

Yours sincerely,

N.F. Wobb

Secretary General

CONFIDENTIAL (1121)

J.B. Denson, Esq., 0.B.E.,

on, Esq.; Far Eastern Department.

Frized

With the compliments of

THE COUNSELLOR (COMMERCIAL)

ধ

भू

Mr Marland

THE OFFICE OF

THE BRITISH CHARGÉ D'AFFAIRES

PEKING

5 May, 1967

гр.а.

(1121/67)

CONFIDENTIAL

folis 50 FC6/1/52

Office of the British

Charge d'Affaires,

PEKING..

5 May, 1967

RECEIVED IN ARCHIVES No.31

1 5 MAY 1967

FC6/1

Alistair Hunter is answering separately the letters which you wrote him on 27 and 28 April about various complete plant projects. These were all most helpful, and we are particularly grateful to you for your efforts to get the companies concerned to co-operate with us in keeping us fully informed. In several places you express concern at the Chinese attitude towards these projects, and I think it might be helpful if I try in this letter to set out our views on current Chinese policy towards complete plant contracts and how it affects us and British companies.

In your letter about Simon Carves you ask whether the increase in the number of problems which seem to be arising at Lanchow is the result of deteriorating conditions there or of a greater willingness on the part of the firms concerned to take us into their confidence. I do not think that either of these is the answer. We have always heard promptly, even in the past, when something has gone wrong, And from the accounts given to us by British staff from Lanchow conditions there are rather easier than they were a few months ago - I am sure that the people there now are no worse off than lumphreys and Glasgos's men in Szechuan last year, and in many ways indeed their condtions are a great deal better. Life is very restricted in such an area, and there are inevitably frustrations and delays in the progress of the projects. The picture need not always be gloomy. Eric Jones of Dobson and Barlow, for example, who passed through Peking last weak having spent nearly five months in Lanchow on equipment for the Vickers-Zimmer plant, claims not only to have enjoyed his time there but to have finished his task sone months ahead of schedule despite the fact that the Chinese had complained about the state of the equipment when it arrived, and were not satisfied until a senior member of the company had been to Lanchow to reassure them. (You will understand our pleasure at learning that this company had received a queen's Award for Exports last week).

3. What I do think may be happening is a tightening of the Chinese attitude towards the problem of resident foreign engineers. Recent events have certainly accentuated their difficulties in "looking after" (or keeping a watch on) foreigners, both because political activity has reduced the number of man/hours available for this work, and also probably because closer supervision has been thought

/necessary

A.K. Rogora, Esq.,

Commercial Relations and Exports Department, Board of Trade.

CONFIDEITIAL

CONFIDEITI AL

necessary to prevent foreigners aseing the less savoury aspects of the Cultural Revolution. We have heard that Techimport are "revising their complete plant purchasing policy", and that this probably means that in future they will buy separate items for inclusion in a Chinese built plant rather than complete plant package deals. If this is true, one object of the exercise is undoubtedly to cut down still further the number of foreign technicians resident in the country.

4. Most of our existing complete plant projects appear to be Buffering from this development. Simon Carves seem to have had trouble with visas for other engineers as well as for Downs (their telegram of 6 Harch to Techimport, which you copied to us). Vickers have had similar problems, made worse admittedly by their own belated decision that they needed nearly twice the number of men on site than they provided for in the contract. Prinex have been waiting for months to get men on site, and now have the impression that the Chinese want to try and do most of the work themselves. (other technicians from Lanchow have, incidentally, commented to us that the Prinex delay is probably because "the Chinese don't have enough technicians and interpreters to deal with such an influx of foreigners") And now you report that Plessey, too, ure being worked on by Sun Shih- wei with the probable purpose of dissuading them from sending their engineers.

5. The Chinese have always been extremely fastidious about the quality of equipment delivered to them, and there is not yet sufficient evidence to show that the Cultural Revolution has made them still more fussy. They are certainly no less so, as both the British firms now in Lanchow can testify. he can be fairly certain that Chinese complaints about quality will continue to be a routine ingredient in the installation of Pritish plant in China, and the number of complainte mɛy well increase if the Chinese take it upon themselves to do more of the installation.

6. In para. 4 of your letter about Vickers-Zimmer you made a good case for trying to persuade the Chinese that if they want to obtain the technology from the best which they need for rapid industrial advance they must make life easier for the companies and their personnel.

There is, unfortunately, no longer any hope of convincing the Chinese by such reasoned argument. Current Chinese propaganda, as you say emphasises the need to increase production (through revolution). This must, however, be related to the doctrine of self-reliance" which has been preached for a number of years. Production increases, but through the efforts and inspiration of the Chinese vorker - it is rarely admitted in public that there is any purchasing from the West. Before the Cultural Revolution the practically-minded men in charge of industrial and commercial affairs seemed to be perai ted to ignore official policy and to purchase from the West to the extent that the foreign exchange position allowed, "o-one seened greatly to mind that foreign technicians scattered through China were present vroof to the Chinese people that self- reliance was not being practised 100%; and indeed some Western contacte, such as the Austrian one for LD steel plant signed in December, 1965, received Chinese press publicity. Nowadays, when trading officials

COM TEINTIAL

/have

CONFIDENTIAL

- 3-

have revolutionary rebels at their elbows, there is much greater pressure on them to practise what is being preached. Presumably even the politicans are sensible enough to realise the disastrous consequences of cutting off trade with the Weat: but one guesses that their instructions are now to strip the purchasing list to essentials, and wherever possible to avoid the need for foreign technicians to come to China. Hence the "revision of complete plant purchasing policy" mentioned in para. 3.

7. I do not think that this development will greatly affect the volume of our exports to China. These have been virtually limited to essentials for a number of years, and if the Chinese no longer want to buy complete plant (this, I hasten to emphasise, is not yet established fact) they will almost certainly still want to buy many of the more sophisticated bits of machinery for their own complete plant projects. They may also still show considerable interest in buying "knowhow" and in sending small groupe of their experts for training at plants in the U.K. But as already mentioned we seem likely to be in for increasing difficulties in the installation and inspection of advanced equipment. All we can and need do, I think, is increase our efforts to get firms to consult us from an early s tage in their negotiations. We must then point out to them with still more emphasis than heretofore the likely pitfalls, and ensure that they safeguard themselves against e.g. the Chinese making major claims against the company without allowing British personnel on site.

8. Since this letter gives some views on likely developments in some aspects of our trade I am sending copies of it to John Denson at the Foreign Office and Furys Davies in Hong Kong.

(T. Feters) Counsellor (Commercial)

CONFIDEITI AL

FC6/1

FOREIGN OFFICE, 8.W.1.

19 May, 1967.

Thank you for your letter of 8 May to David Noss and the copies of reports enclosed therewith.

I have now taken over Ir. Ios8* desk and shall look forward to meeting you in the future.

(E. J. Sharlani) Far Eastern Department

N. F. Webb Esq.,

Secretary-General,

Sino-British Trade Council,

21 Tothill Street,

'ondon, S.W.1.

Rafiq

ী

(83126) BLS.

NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No.

DRAFT

Letter

Type 1 +

To:-

Accrey

Confidential. Restricted.

Unclassified.

N. F. Webb Esq.,

Secretary General,

Sino-British Trade Council,

21 Tothill Street,

London, S.W.1.

From

J. Sharland

Telephone No. & Ext.

Department

Thank you for your letter of 8 May

to David Moss and the copies of reports

enclosed therewith.

I have now taken over Mr. Moss' desk

and shall look forward to meeting you in

the future.

Ledi

Ed (1626)

Mr. Denson

FC 6/1 W. 53

Reference

To see reports and approve draft please.

Jihr there is

(E. J. Sharland)

17 May, 1967.

izient

18h

CONFIDENTIAL

RECEIVED IN

Sino - British Trade Council ARCHIVES No.31

SB Sino

中英貿易协会

President: Mr. John Keswick Cad

10 MAY 1967

FC6/1

The Associacion of Belcah Chambers of Commerc The Confederation of British Industry

The Chisa Association

The London Chamber of Commerce

NFW/FEC

Executive Committee

Doar th Moss,

21 Tothill Street, London S.W.I Whitehall 6711

CONFIDENTIAL

8th May, 1967

I am sending you herewith copies of reports on meetings that Mr. Keswick had with Mr. Lu Shu Chang and Pi Sheng-yu on the 20th April in Canton. You will see that these copies are numbered and the President requests that you keep them for your personal information only.

Attached also is copy of Mr. Keswick's letter to Mr. Hou Ton of C.C.P.I.T. of the 22nd April concerning the Technical Journal proposal.

Yours sincerely,

N.F. Webb Secretary Genoral

I Sharland D..

CONFIDENTIAL

- 3 1967

Sino-British Trade Council, 21, Tothill Street,

London, S.W.1.

22nd April, 1967.

lieu Ton, Esq.,

China Council for the Promotion of International Trade,

si Tan Building,

VERING,

(Dear Hon Ton)

Thank you for arranging for my invitation and reception at the Kwangchow Fair. I very much enjoyed the opportunity of mooting Minister Lu and your colleague Mr Bi Shong-yu. We had sono interesting discussions and I also had an opportunity to neet representatives of the Red Guards and the Revolutionary Rebels at an informal dinner one evening. I found this particularly instructive, as I was able to learn from them the ..sture and momentum of the Cultural Novolution. Both I and my wife were vory pleased to participate.

with this lotter I am sending you a mock-up. that is to say, a preliminary version in English of the technical news magazine which I am suggesting that the Sino-British Trade Council should publish quarterly in the Chinese language. You will notice that English is used in the mock-up, but this is merely to indicate the type of article that will be produced. These will all be on technical subjects describing modern, up-to-date developments, both present and future, on various subjects. It is also intended that some of the quarterly publications shall be devoted exclusively to one industry: for instance, agriculture at one time and the electrical industry another.

I am asking Mr Peters to bring this letter to you and hope that you may discuss with him how we should proceed.

CONFIDENTIAL

1...

..d

particularly anxious to put two points to you:-

́a) that the idea is generally acceptable

(b)

that the C.C.P.I.?. will undertake the distribution and provide a mailing list. he will, of course, be happy to most any expenses incurred by your Council on our behalf.

This proposition is not dissimilar to tue French publication, put out by the franca Government in the Cainese language. In our cane, however, it will be the work of the Sino-British Trade Council and will be prepared with a clear industrial background. It is hopod that our publication will be the best of its kind, produced abroad for distribution in China wider untual understanding and co-operation.

(Yours sincerely,

John Keswick)

CONFIDENTIAL

MEETING

BETHEEM IR. KESWICK, PRESIDENT SBTC, & VICE-MINISTER OF FOREIGN

TRADE. LU SHU CHANG = 11 ik. SERIL 20TH 1967

Shu-chere, Vice Minister

*** Ting-tung, Deputy Secretary-General, Canton Fair Wang Toh-chang, Secretariat, Canton Fair

Miss Chu You-lan,

& one interpreter

Mr. John Kenwick, CMG., President S.3.2.c.

P.S. Marshall,

Y.C. Huang

Secretary, 11

The meeting took place at the Secretariat, 10th Floor, Canton Fair.

Me. 7", expressed regret that a previous engagement had prevented his attente at the dinner party given by Mr. Keswick on April 19th. He hoped Ar. Keswick had enlarged his understanding of the present situation, from explanations offered at the party, by Red Guards and revolutionary workers.

Mr. Kepulak said he had been pleased to note how young most of then warO. Youth was the most important factor in the world today. Chairman Mao's works contained many references to the role of youth. It was their world, and rightly so. In England we had a saying, MESTOPS Committer a young are easily corrected, older people's errors are not so easily changed". - M. Lu agreed.

Main explained that the Red Guard movement was organised from the firt, by the students themselves. Chairman Mao had given the movement his support, and later accepted personal leadership. Since then, it had spread to other countries. Last year, the Chairman personally reviewed 12 million Guards in Peking, after which, they spread throughout the countryside, being given time off from school, and free transportation, to assist them in taking Mao Tse-tung's thought from the schools to industry and the country-people, and to spread it throughout all society.

In the process, young trail-blazers have emerged.

These young people constructively use Mao's thought in practicing revolution in

verything they touch. They have made some mistakes, it is true, but these can be rectified as the campaign proceeds.

These young revolutionaries are the force behind the People's Liberation Army If Mao calls on them, they will go anywhere, and do anything. This is excellent preparation for any war which may eventuate. The U.S. has more than 400,000 mea in Vietnam, and is escalating the struggle, but is having a very tough time there. If they should invade China, let them, the earlier the better and the more the better. We have made our preparations, I said.

►

If you

The Cultural revolution has solved zany problems: the successors of the present leadership are assured. The imperialists placed their hopes on the second and third generations of Chinese youth. maet any American friends, please tell them how wrong they were, China will never change colour.

Mr. Kendale suggested they talk about trade.

From the time of the Briti 1964 exhibition, trade had risen steadily, and was going quite well. He spoke as President of the Sino- British Trade Council, and Kr. Marchull was one of its secretaries. ...e S3TC had devoted great "forts to pro ste this trade. Choved some achievement, but we wanted a further increase.

CONFIDENTIAL

The figures

../..

ed to discuss four matters:

1) China, in 1965-6, sent a number of delegations and specialist mission to the U.K., and these were very welcome. He hoped wo La sce a resumption, and an increased number of missions in 1967.

Both the Charge d'Affaires, and the Commercial Counsellor, were

tem London, and business circles in the U.K., and people ly, hoped they would soon be back. People were interested in trade, and in the Cultural Revolution, and without these two leading Chinese personalities in London, it was sometimes difficult to interpret the situation for ourselves.

We wished to see, - to invite, - more technical missions from China, including missions from the Ministry of Foreign Trade and CCFIT.

2) British industry, science and agriculture was developing rapidly. This was not always appreciated abroad, and we now proposed to produce a magazine, giving details, interesting technical articles etc. concerning the most advanced and up-to-date Sritish products and techniques. The magazine would be in Chinese, and all material would be of a high technical standard, designed to be of interest to the specialist rather than the ordinary reader.

We wished the CCPIT to assist us in distributing this magazine, 5.lping us to compile a list of suitable addressees. (In translation,

testretjo did not make is fully clear that we required a list, not,

fon faciliting. We should make this clear in wir. Keswick's

letter to ɔu Nung).

Mr. Keswick would write in more detail, to Hou Tung at Peking, and suck his assistance. He hoped that Kr. Lu would also help the project, through the Ministry of Foreign Trade channels.

(a sample was examined and returned)

3) The third matter concerns large contracts. business is going along fairly well, but we also hope to secure a

Day-to-day good share of the larger orders which may be placed during the next year or so, particularly in electrical power equipment, and steel.

then we laat met, I asked for your help over difficulties in correction with an order for a computer to be used in a power plant project. This had bean settled satisfactorily, the company concerned, paying a considerable sum as compensation.

U.K. prices for large power plant were extremely competitive, -ven in competizion with French and E. European suppliers.

It was to be hoped that our manufacturers would have a chance to tender in this field.

4) Finally, I wish to congratulate you all on the fascinating show of exhibita, and your arrangements for the Fair.

Mr. Ly thanked Mr. Keswick for his good wishes, and said he was happy to see the trade increase. However, it was a regrettable fact that trade could not develop freely as it should, due to the Labour Government's adherence to the U.S. embargo policy. Despite the settle- munt arranged in the dispute over the computer contract, the same sicacion could easily arise again in the future. He wondered whether in fact it had been caused by a British firm's refusal to honour an Agreement, or whether it been caused by U.S. pressuno.

Businessmen should bring influence to bear on the Government, urging them to whögh a co.patunavuly independent policy.

It was also the case that the British and Hong Kong Governments ---- an cnburgo on bile activities of Hong Kong merchants.

../..

- 3-

As an old friend, Mr. Keswick knew the Chinese nature very well; he knew they feared nothing, and could not be deceived. As a friend, he should speak to the Governor when he travelled back via Hong Kong, tell him if this policy continues, it will bring bad results.

It was his own impression that British people generally, did not favour adherence to U.S. policy. It was the result of pressure from th 7.5.

He hoped his old friends would give attention to this problem, and force the adoption of a "comparatively independent policy" (verbatim). It was now 17 years since the beginning of the embargo and all to no effect. The only affect was the bad influence it exerted on British trade.

As for China, she was even grateful for such a policy; it forces the people to greater efforts in production, and the results could be seen in the exhibition. They had scored victories, first over the embargo, and second, over the Soviet revisionists.

A new stage of the Cultural Revolution had been reached and already was stimulating production. There would be a leap forward in both agriculture and industry. Many products, as visitors would see,

now equalled advanced world technical standard.

People in China, now think as one, and all actively employ Maoist thought in all their work. We should expect to see a leap forward in production, this would mean that foreign trade also would increase. China was willing to develop trade on the usual principles of equality and mutual benefit, but this required equal effort on both sides. Politics and trade still go hand-in-hand. I hope you will recognise this point.

As for the proposal to publish an SETC magazine in Chinese, seemed to be a matter for CCPIT. It would contribute to friendship and mutual understanding between the two peoples, and he would help, therefore, where he could.

Mr. Lu fully supported the other efforts of 5BTC to increase the areas of understanding between the two peoples.

He hoped Mr. Keswick would see more of the changes brought about by the Cultural revolution, and he wished him a happy stay.

In closing, Mr. Keswick mentioned a rumour in London to the effect that Mr. Nan Hân-chen had died, Was it true? Mr. Lu looked to Tan Ting-tung, and both confirmed that it was true,

- he died last

year.

(17)

MEETING

CONFIDENTIAL

BETWEEN MR. JOHN KESWICK, PRESIDENT OF SBTC, & MR. PI SHENG-YU,

VICE-CHAIRMAN CCPIT, CANTON

The meeting book place at the Canton Fair Building, 20.4.67.

Present:

Mr. Pi Sheng-Yu

& interpreter

Mr. John Keswick

P.S. Marshall

Y.C. Huang

Mr. Keswick

when

There is considerable interest among British businessmen, trade with China. Trade in both directions has increased at a slow, but steady rate. During the British 1964 exhibition at Peking, our President of the Board of Trade also was at Peking, I predicted in a speech, that total trade could rise from the existing level of £32 millions, to £50 millions within five years. Now, less than three years later, we see that trade both ways, already totals £52 or more millions.

We are not satisfied with that, however, we want to sea the figure rise year-by-year.

I am happy to be in Canton again. I shall not go to Peking to see CCPIT during this visit. I have been in touch with Hou Ton, and he agrees that it would be more convenient to go there later on.

However, I should be grateful if you would pass him a message

from me.

Last year, he and I were discussing some matters, and I told him of a proposal that S.B.T.C. should produce a magazine in Chinese, We have gone ahead with the idea, and I want him to see a sample of what I have in mind.

(a copy of the specimen-magazine is produced and examined) You will see it's not for the ordinary reader, but for the specialist, the technician and the engineer. It would be a quarterly, or 4-monthly publication. We should print about 3,000 copies in Chinese, and I would want CCPIT to assist us in drawing up a list for its distribution.

The object of the magazine is to keep people informed about British progress in advanced engineering techniques, new discoveries, processes and so on. Each issue would have a main theme of some kind.

Most of the businessmen who come to the Fair would support the idea, which should lead to increased understanding all round.

Mr. Pi agreed to pass the message on to CCPIT Peking and

Mr. Hou Ton.

Replying to Mr. Keswick's congratulations on the organisation work and exhibits at the Fair, Mr. Pi said everyone was very busy with Cultural Revolution activities and deep study of Chairman Mao's works. Applying Mao's thought to all affairs had won great victories for China, The Cultural Revolution was a completely new thing, and a contribution to assist the whole world.

Mao Tse-tung saw that the leadership of world revolution has been good under all the Soviet leaders up to, and including Stalin. Under Khrushchev, things changed, and Soviet leadership became revisionist.

Therefore, in China, we will carry our revolution through to the very end, to ensure that China will never change colour, and to prevent any possibility of a restoration of capitalism.

CONFIDENTIAL

.../...

Last night at your dinner party, the revolutionary groups and Red Guards told you something of what is going on.

We know that our movement is not understood abroad. Your newspapers spread lies and slanders. Our workers and peasants and soldiers are the revolutionary support, they read Mao's worka and use every method to employ his thought in everything they do.

Some counter-revolutionary elements, bad elements, and capitalists still spread rumours and try to defeat the revolution. Chairman Mao says 'whatever the enemy opposes is good'. The greater the opposition, the firmer our stand will be.

The decisive battle has been won. All the people, the Kanpu and intellectuals support and study the works of Chairman Mao. In applying the Thought of Mao Tse-tung, we make revolution, and this has had a stimulating effect on production. Production is excellent in industry and in agriculture also. This can be seen from the exhibits at the present Fair.

We hope you will stay here for a while, and learn more about our revolution. You will then be in a position to understand the situation when you are back in the U.K.

Keswick thanked Mr. Pi for his interesting account He had been happy to hear about the revolution from the Red Guards' own lips the night before, it was a new experience to everybody, and his visit to Canton had made a vivid impression already. He should be in a position to explain the movement to his friends in London.

Regarding the magazine project, he would be obliged if Mr. Pi would please pass the message to Hou Ton. He would call to say goodbye to Mr. Pi sometime before the Fair closed that evening. He would also write to Hou Ton personally.

Mr. Pir Did I not meet you some years ago at the Ai Chun hotel? Yea? I thought 80. So you are an old friend, and last night you told me you also are a rebel. You and I work to promote friendly trade. Now, if you are a trus rebel, you must rebel!

Let me offer a suggestion: in Vietnam, the U.S. aggressors are fighting the people, and the Hong Kong authorities allow the passage of war materials - this is not a friendly act. We wholeheartedly support the Vietnamese people in their struggle, and when the Hong Kong authorities assist the U.S. by allowing them to use Hong Kong, we don't like it.

As a rebel, you should tell your Government. of friendship, and would also promote trade.

This would be an act

I don't support the I watch the situation that it was used as

Mr. Keswick Thank you for your good advice. present position, and I do want peace in Vietnam. in Hong Kong very carefully, and if I saw any sign a U.S. base, I assure you I should protest most strongly.

The Hong Kong Government, of course, does not allow the passage of war material. U.S. ships use facilities there only for rest and recreation, and quickly move on. Hong Kong is not used as a base.

I want peace in Vietnam. This is the most important problem in the world today. I hope by the opening of your next Fair, that something will have been done to improve the situation there.

Please accept my assurance that I am prepared to take any real opportunity to assist a settlement, and I hope you too will do your share to bring it about.

(The Meeting then closed)

T. George, Esq. Far Eastern Dept Foreign office.

Comp/29

With the Compliments

A.K. Rogora

BOARD OF TRADE

Guter

reference: CRE 12341/C

Your reference:

CONFIDENTI AL

BOARD OF TRADE

Commercial Relations and Exports Department-

BY FOR ION CIFICE AIR BAG

1 Victoria Street, London S.W.1 Telex: 25955 Answer Back; BOTHQ LONDON

Telegrams: Advantage London S.W.1

Telephone: ABBEY 7877, ext.

RECEIVED IN

ARCHIVES No 31

- 2 MAY 1967

Sad but underslandas FCG/I

F2611

28th April, 1967.

23/

I am writing to confirm my Creda 9 about Fischer of Vickers-Zimer and to explain the reasons for the delay.

2. I have spoken to both Jay and Cockburn (Managing Director) of Vickers about Fischer. I do not need to go into all the background and difficulties experienced by Vickers at Lanchow since this is already very well known to you. Jay got some concessions out of the Chinese about conditions at Lanchow when he visited the

aite a few weeks ago, However, there were none, I gather, on the Chinese side about local leave etc. (i.... in Hong Kong etc.), and inflexibility on this seema to be absolute. As a result of these conditions and restrictions on travel etc. Vickers are having an increasingly difficult time in persuading anybody to go to Landbou. Vickers regard Fischer as very much the right man for the job (as indeed I think di the Chinese) and there is little doubt that he will eventually go (probably within the next fortnight) but he has made certain conditions which Vickers are finding it rather difficult to meet although they expect to resolve these shortly. For one thing Hecher would like to have certain junior people with him to deal with day-to-day probleas which, unlike Barnes, he would find it difficult to cope with. Cockburn explained at some length that a number of engineers who would automatically le sent to Lanchow under the terms of the contract have now refused to go or are making extreme difficulties about going. They do not believe that everything is quiet and prefer to believe exaggerated reports in the Press about conditions in China. They are also much concerned about arrangementa for local and home laave. One particular man apparently refused point blank to go to Lanchow and when presented with the taras of his contract with Vickers, which allowed for service anywhere overseas at the Company's discretion, resigned on the apot. I understand that the restrictions on the more junior staff at Eanohow are probably a little more onerous than on senior staff.

Many of these problems were, I think, discussed by Jay with you when he was in Feking a few weeks ago but as time goes on it is becoming more and more apparent that despite the assurancés which the Vickers management are giving it is becoming increasingly difficult to persuade engineers to go to China. Both Cockburn and Jay emphasized that if only the Chinese could be persuaded to relax all their restrictions on leave etc, it would wake things considerably easier all-round. Additionally, if the Chinese would leave Vickers to decide who were the right persons required for the various jobs at Lanohow and when they should go to the

/aite

A. J. Hunter, Esq.,

First Secretary (Commercial),

Feking.

CONFIDENTIAL

Unkkay!

फै

as I

site this would also help things to work out a lot better. The trouble expect you know, is not so much with Techimport but the customer at Lanchow, what extent you can help to resolve these problems I really do not know and, of course, the problems over persuading Viokers' staff to go to Lanchow are for Vickers themselves to resolve, Cockburn, however, pleaded that one of the only positive things that he thought 3 might be able to do would be to urge the Chinese to be more flexibile over their present restrictions.

you suppose that the Chinese realise that as time goes on and if things do not get easier, it well become increasingly evident to British Tând other Western countries) that conditions in China are very much more rigid than elsewhere; and recognition of these difficulties will undoubtedly be reflected in the cost to the Chinese of signing contracts with foreign suppliers who will be forced to allow for a much wider margin for unforeseen contingencies in the case of China than they do for other markets? If, as we are all led to believe, one of the sims of the Cultural Revolution is to increase production and efficiency and consequently enhance the economic development of China, then the Chinese must, if possible, be persuaded to realise that one of the ways of reducing the cost to themselves of employing foreign techniques, as they sust, is by creating the right atmosphere which will not only encourage foreign participation in the development of the Chinese economy but at a reasonable cost to the Chinese. We know that the Chinese are very hard bargainers and always expect to be in the driving seat. I suppose we can only hope that they, like many before them, will eventually have to come to grip with the realities of the other half.

5. To what extent you could get this across to the Chinese I leave to your discretion. It is unfortunate that our relationship with the Chinese in London is not such as we could have a friendly discussion ourselves on such matters.

Vickers have undertaken to infora me immediately they are in a position to give a fira date for Fischer's departure and I will cable you accordingly. Jardines in Hong Kong have, incidentally, added their weight to the necessity for something to be done so quickly as possible about Fischer.

(A. X. Rogora)

CONFIDENTIAL

CYPHER/CAT A

ROUTINE PEKING

TELEGRAM NO. CREDA 7. ACTION COPY

TO BE FILED ON APPROPRIAT- REGISTERED FILE

15.

GYPHET

KIWARD TH

RESTRICTE

TO BOARD OF TRADE

26 APRIL 1967

Received 3.0.2. 1.25 p.¤, 26th April,

RESTRICTED.

ADDRESSED TO FOREIGN OFFICE TELEGRAM NO CREDA 7 OF 26 APRIL REPEATED

FOR INFORMATION TO HONG KONG (FOR B.T.C.).

VICKERS ZIMMER.

HUNTER, WHEN AT TECHIMPERT TODAY ON OTHER BUSINESS, WAS TACKLED BY CHINESE ABOUT NON-ARRIVA OF FISCHER, WHO IS TO SUCCEED BARNES AS LANCHOW SITE MANAGER, CHINESE SAID THEY HAD ISSUED HIS VISA SOME TIME AGO, AND APPEARED ANXIOUS FOR HIM TO ARRIVE VERY SOON, 2. GRATEFUL FOR URGENT NEWS OF STUATION.

3. HONG KONG PLEASE PASS ABOVE FOR INFORMATION TO KEYES OF

JARDINES, WHO ARE AGENTS FOR VICKERY.

Copy M.

HOP SON

Br. I. 8. Russell (Astion) Hr. 3. Nastavi sh

3. Mr. A. K. Rogors

M.O.D. (2)

c. 5

SENT AT 044NZ 26 AYRIL

RECD AT 0755Z 26 APRIL

نيا

FLAG A

Fe41151

Mr. Rodgers

CONFIDENTIAL

F26/1 N.51

TRADE WITH CHINA

You may like to see the letter of 26 April from

the Commercial Council in Peking to the Board of Trade

about the recent visit to China of Mr. Keswick of

Matheson & Company.

2. I have not seen Mr. Keswick since his return but I

should think it very likely that he found his visit to

Canton most depressing,

3. I agree with Mr. Peters' conclusion that for the

time being we have very little hope of expanding our

trade with China.

LTR 6.5.67

p.a.

Afdekkan

(A.J. de la Mare)

4 May, 1967

CONFIDENTIAL

CONFIDENTIAL (1121)

E. Bolland, Esq., Far Eastern Department.

With the compliments

THE COUNSELLOR (COMMERCIAL)

4/5

THE OFFICE OF

THE BRITISH CHARGÉ D'AFFAIRES

PEKING

26 April, 1967

(1121)

COFFIENTIAL

Office of the British

Charge d'Affaires,

FAKING.

RECEIVED IN

26 April, 1967

ARCHIVES No 31

1967

FCB/1

After all our discussions with Ho Tung of C.C.P.I.T. Mr. Keswick was only given a visa to visit Canton. I therfore went down to meet him there. Le had some useful discussions

.B.2.C. are

about the various projects in which we and the interested and we also had general discussions about the likely development of

ino-British Trade,

..est

2. Mr. Keswick was really very depressed by his visit to Canton, I do not think that he had fully understood the extent of the new political atmosphere created by the Cultural Revolution. In his interviews with members of the Canton Branch of the Chins Council for the Promotion of International Trade and with Lu Isu-chang, Vice-Jinister of Foreign Trade at which Tan Ting-tung of the kuropean apartment of the Ministry was present there was alnost only politionl discussion. Lu Hau-chang complained at length of the wickedness of il.W.G.'s pro-American policy in Vietnam, of the Hong Kong Governor's permitting the use of Hong Kong as an American base, and then of the strategic embargo and the quotas. Lu Hau-chang also praised at length the glorious achievementa of the Cultural Revolution under the leadership of Chairman Mao and Vice-Chairman Lin Fiao.

3. Mr. Keswick's dinner party for the Chinese which he gave as a director of Jardines rather than as .B.T.C. but which we and Peter Marshall attended was also an occasion for the Chinese to tell us all about the Cultural Revolution and revolutionary rebels and Red Guards from the Import/export Corporations attended to explain the revolution to us.

4. In this atmosphere Er. Keswick found it difficult to discuss projects for improving trade with the Chinese. He discussed the Technical Jo mal roject with Lu Hau-chang and was told that this was a matter for the C.C.P.I.T. in Peking.

5. Mr. Keswick also discussed toe possibility of exchange visits b. agricultural experts and again these suggestions were politely listened to and said to be something for reference to Peking.

6. I now think that routine British exports to China will continue steadily but that for the immediate future there is little chance of

Ŋ major new effort to increase our sales here being welcomed by the Chinese. should still make preliminary preparations for

B. NacTavish, 28q.,

Commercial Relations and Exports Department,

Board of "rade.

CONTONTIAL

/further

CONFIDENTIAL

further exhibitions such as the proposed agricultural one and another 5.I.M.^, effort so that we can get to work at these seriously if the This political atmosphere here shows any improvement in the future. sounds a rather pessimistic assessment but is, I think, one shared by Mr. Keswick.

7. In his Jardine hat Mr. Keswick seen the present situation as being one likely to favour him. Some businessmen may just not be prepared to suffer all the political indoctrination which is razzed down their throats in China and may be more willing to let Jardines try to sell their products in China. Other businessmen may not be able to obtain visas and will therefore have to ask an agency to try to do their selling for then.

I am copying this letter to Eddie Bolland in the Foreign Office and to Anthony Elliott in Hong Kong.

(T. Peters) Counsellor (Commercial)

CONFIDENTIAL

PRIORITY MARKING

BOARD OF TRADE

File N

CRE/311/66

ROUTINE

SECURITY CLASSIFICATION

TOCZEK X

Date)

Despatched

Conâdential

[Security classification]

CONFIDE."TU

• Dale

To/1Wmber

Law (G.M.T.) tologram should

reach address00(3)

5049

LUE

RECEIVED IN

ARCHIVES No.31

[Codewords-if any)

1 MAY 1967

Address to

telegram No.

(date)

Cypher

And to

FC6/1

Draft.

Telegram to:-

PAKING

No. CREDA 9

(Date) 27-4·67

And to

Repeat to :-

Sailing to

Distribution :-

24/4

repeated for information to

Saving to:-

Test: (to be typed with double spacing)

YOUR 7.

VICKERS HOPE TO GET FISCHER OUT ASAP

BUT THERE ARE COMPLICATIONS ON EXACT

TIKING.

LETTER FOLLOWING BAG,

Fox

Camar to Def. Dept. by murrabe

1/5

NOTHING TO BE WRITTEN IN THIS MARGIN

Copies to. -

CUPINTA || A.K. Rogora

محمد

V/313

2 B. MacTuvish

V/302

32. George

Far Eastern Dept. Foreign Office

4.5 MoDiz!

Signature of Originator

DO HOT TYPE ON REVERSE OF THIS FORM flae continuation sheet Tel/TG (Cont}}

EACH SHEET to be eigned by the Originator A"K." "Rögora

SB Sino-British Trade Council

中央贸易协会

President: Mr. John Keswick C.14.0.

Sponsors: The Association of British Chambers of Commerce

The Federation of British Industries

CONFIDENTIA

The China Association

The London Chamber of Commerce

21 Tothill Street, London S.W.1 Whitehall 6711

Fresident and Members of Me Executive Council.

Dear

th. Moss.

17th April, 1967

I am sending you herewith a copy of a lottor I have received from the Board of Trade dated 14th April, with a description of the Danish Exhibition held in Peking in March, which I think you will find of interest.

Yours sincerely,

RECEIVED IN

1.F. 1855

Segretary Conoral

JISD. (Mr. Wineking) 4

FED

грая

19/4

DOM 19/0

ла

ARCHIVES No.313

1 9 APR 1967

Fabli

Centon Dipt. пом

21.4

12014.

Our reference: CRE 1272/G

Your reference:

Dear Mr. Webb,

CONFIDENTIAL

BOARD OF TRADE

Commercial Relations and Exports Department

1 Victoria Street, LONDON S.W.1

Telex: 25955 Answer Back: BOTHQ LONDON

Telegrams: Advantage London S.W.1 Telephone: ABBey 7877, ext. 2253

14"April, 1967

1 7 APR 1967

We have recently received a report from Theo. Peters in Peking about the Danish Industrial Exhibition which was held in the Agricultural Exhibition hall for two weeks in Maroh. As you know, this was the sole survivor of the three or four Western exhibitions which were to be held in China during 1967.

The catalogue which I enclose for your retention will give some idea of its size and scope.

As was probably inevitable in an exhibition as general as this one, some of the exhibits were less interesting to the Chinese than others: the instrument stands and those showing marine equipment drew crowds, but as one participant put it, rather too much space was devoted to ice cream machines! There was also quite an extensive "information section, which seemed to our people to have little value or impact in the inward looking atmosphere of present day China. The exhibition had style but was a little lacking in substance.

You already know, I think, of the events which led to the "postponement" of the Swedish National Exhibition, due to have been held in April, and the change of site for the Danish one. In the end, the Danes were remarkably lucky. The transition to the Agricultural Exhibition Hall caused then a few headaches of rearrangement, as can be seen from the old and new exhibitions plans in the catalogue, but the 4,000 or so square metres of space was in fact ample for their requirements. Koreover this hall was in many respects more convenient than the Peking Exhibition Hall, and it did not seem to affect either the quantity or the quality of the attendance. A representative of a British merchant house, who was assisting Danish firm at the exhibition and had previous taken part in several British exhibitions in China, commented to our prople that although the number of experts who had visited the stands was not perhaps as high as in the vintage days of 1964, mary more knowledgeable visitors had come than had visited the British SIKA exhibition in Tientsin last September and the exhibitors appeared in consequence to be moderately happy. Lectures also appear to have been well attended.

N. F. Webb Esq.,

Sino-British Trade Council,

21 Tothill Street,

London, S.W,1

CONFIDENTIAL

/Moreover,

CONFIDENTIAL

Moreover, most of the Danes left happy at having sold at least the majority of the quipment they brought with them. There are rumours that as much as 80 to 85% of the exhibited equipment was sold. It is, of course, difficult to know how such a figure is arrived at and few of the Danes to whom Theo Peters spoke claimed so high a figure for their own company. Nevertheless, it seems to be zorall for a company to have sold more than half of its equipment for example Cho two telecommunication companies CAT and Storno sold a total of £8,500 worth of equipment between them, including two GNT teleprinters. There have also been enough advance orders to make the more far-sighted exhibitors feel comparitively happy although we can provide no details.

As I have already said, the Danes were lucky in the timing of their exhibition. Two months before the opening, when the Cultural Revolution was at its lowest ebb, the Danish Embassy were considering that they would be fortunate if they got through the exhibition without incident or administrative mishap, and had few hopes that the the Chinese would have time to take any commercial interest in the exhibition. But as it turned out, the exhibition took place at a moment when strenuous efforts were being made to restore order to the economy - and moreover when the Chinese were trying very hard to provide evidence to the outside world that the chaos of January and February had not affected their interest in economic and technical matters and in the development of foreign trade. Inevitably it was not possible for the Danes to make even as much contact with the Chinese endusers as had been possible in pre Cultural Revolution days; and they had to endure a pretty stiff dose of revolutionary propaganda in order to achieve as much as they did. But compared with what SIMA suffered in Tientsin last September, and other countries in subsequent exhibitions in 1966, their exhibition was a distinct success.

Yours sincerely,

Mr. Surachian

K. KacLean

CONFIDENTIAL

SB Sino - British Trade Council

中英貿易协会

President: Mr. Jolun Keswick C.M.G.

The Association of British Chamber of Commerce The Confederation of British Industry

The China Association

The Leadon Chamber of Commerce

RECEIVED IN ARCHIVES No.31

1 7 APR 1967

Feb/1

NEW/FEC

21 Tothill Street, London S.W.1

Whitehall 6711

Enter

жая

President and Dembers of the Executive Committee

19/4.

14th April, 1907

Dear

вил видео,

Trade Figuro s

Provisional figures just to hand are as follows:

March

Imports from China

£2,909

Exports to China

5,420

Jan/arch 1947Jan/March 1966

£8,924

9,902

JOI

7,042

The excellent figure for arch exports probably contains an item for the first vessel delivered to the Chinese by looors. Doxfords, but even allowing for this the trend is encouraging.

Yours sincerely,

X.F.-robb

Secretary Conoral

Baze &

JRED

DET

Far Easton

Dept

1819.4

Dom

17/1v

Fed/1.

FOREIGN OFFICE, 8.W.1.

13 April, 1967.

Keeble has passed to us your letter KPW/TRC of 10 March about the office of the Chinese Commercial Counsellor in Berne.

To the best of our knowledge the Chinese Comercial Counsellor in Berne is responsible for Federal Germany but we do not think that his funotions stretch to other European countries. Sino-Italian trade is normally handled by the trade offices established in Rome and Peking during 1965 while the Babossy in France is presumably responsible for Chinese trade with that country. I do not think that there is much evidence of a wider brief for the Berne offics.

of course in recent months the Cultural Revolution has decimated the staff of the Chinese Comercial Counsellor. It is down from being a Comsellor and four Attachés to a Counsellor and one Attaché,

I am sorry that I cannot give you any batter evidence than this but I hope that this letter will be of some assistmee to you.

1. F. Tebb Esq..

(T. J. B. CHLORS) Par Fastom Department

GEORGE)

Secretary-General,

Sino-British Trade Council,

21 Tothill Street,

Londen, 8.W.1.

Ed (1626)

CONGDENTIAL

Reference..

FC6/1 WITH (45

Letter from me to bulwebb to issue.

Mr. Bokany

Bikeya.a.

2. auth.

I did not pass on the latter from

lacuna

Mr. Karble as it contains animateuravery:

ths Chinese have an

Shtiza in Rome,

which

Aka assumed

IRD

is stree

functioning.

doing its best trou on

unofficial Embassy at the same time!

This is one element 57 tunti in

the view that the Beine Sprice action

a centre to Europa. Ir is through

Switzerland that many of the

Covert deals to

circumvent

сосом

Embargo

But this i

are auanged

not for grurial knowledge.

CONFIDENTIAL

ノエ

I suspect that the Brine Offica

Austiza

Covers Switzetan's

As as wela

but

have no direct evidence of locis.

Food. P.A.

Jasany

13/4

RECEIVED IN

ARCHIVES No.313

1 3 APR 1967

(10234) FC6/1

A. Gange

CONFIDENTIAL

Der Blend

BRITISH EMBASSY

BERNE.

3 April 1967

I enclose a copy of a letter from the Secretary General of the Sino-British Trade Council together with my reply in original. If you see no objection, would you please pass the reply to him. Alternatively, if you think that this is perhaps not the sort of letter which should be on the Council's files, you may care to convey the information orally to Mr. Webb, together with such other information as you may be able to add from your knowledge of Chinese diplomatic repre- sentation in Europe. auriut.

Yam

I see no harm in this. But- we shild have a copy of ofr. Keeble's

lether on our

file. If you agre

E. Bolland Esq.

بنات

(H.B.C. Keeble)

the

نا

Far Eastern Department dupa chorigin in Thor Webb.

Foreign

London S.W.1.

arrange despacito

CONFIDENTIAL

(10234)

CONFIDENTIAL

BRITISH ELBASSY

THUNSTRASSE 50

3005 BERNE.

3 April 1967

Dear Mr. Webb,

Thank you for your letter of 10 March about the functions of the Chinese commercial counsellor in Berne.

As far as we know, the commercial counsellor here is also responsible for West Germany, but we have no evidence to suggest that his functions extend to other European countries. Indeed, the commercial side of the Chinese Embassy has recently been very much reduced and it now consists of a commercial counsellor and one attache instead of a commercial counsellor and four attaches. Chinese commercial transactions with Italy are, I believe, normally handled by the office estab- lished in Peking by the Italian Institute for Foreign Trade, and in the case of France, I would expect the Chinese Embassy in Paris to be responsible.

I am sorry that we cannot give you any firmer indications than this, but I hope that this information may be of some assistance to you.

Yours sincerely,

N.F. Webb Esq., Secretary General

Sino-British Trade Council

21 Tothill Street

London S.W.1.

(H.B.C. Keeble) Counsellor (Commercial)

not passed on monte.

passzon

13/2

CONFIDENTIAL

SB Sino - British Trade Council

Sino-British

Chama

10234

中英贸易协会

c.c.

..again.

President: Mr. John Kerwick CMG.

Speaks: The Assectum of Drake Chambers of

mau Confederation of Bratch fadeniy

The

This is the respecîchie

Body dealing with

Sono. Bviñsh Trodę,

R.E. 13/3

... Xooble Esq., C...

21 Torhill Street, London S.W.I Whitehall 6711

Commiseller (Commercial), British Mbasey, MANICAMA.Geo 30

Switzerland.

10th March, 1967

Boar 3. Heoble,

I hope you will forgive za for approaching you on a. an ovom videl my appear to be outside your normal scope of operation but it my So that through your contacts you are able to ascist us to obtain some inforsation about the scope and motion of the Chinese CoLL:ercial Office in Eern, which is not available olsouthere.

Zefore proceeding further perhaps I should tell you something about the 5.0.7.0. La case At has not previously come to your nožico. As you will coe from the letter head our four sponcors are representative of the major proportion of Weitich Industry and Commerce and although not a Govern- mental body, ve ara pecognised by the Board of Trade, with whom we work closely, as the official organisation for the promotion of trade with China.

Vo vaintain close contact with the office of the

Co. Mercial Counsellor of the Chinese Charge d'Affaires' offico in London but wo era meble to establish precisely what is the position and function of tho Chinese Commercial Counsellor'a Office in Bern. faci address is, as you aro no doubt svaro, Chinese Commercial Counselloma Office, HEV Vidmanstrasse 7, 2003 Tumi Bai Bern

Our understandine to that cince China has no diplomatic relations with Test Garunny, the Comercial Counsellor in Como se responsible for rado with Kost Germany, which has pratiy nerozsod during the last three years, as well as norwal trado with Sultzonland. There are indications however clat their functions cover a vider area than Switzerland and Fast Gomany alone and that they may have a co-ordinating role for other countries in Europa end possibly an overall Ciszodal interest. The size of their mission may give a clue to these points, but I should be most crateful if you could help us with any information that you may have.

13 MARSG

You Might be interested in the trade bulletin that vo publish monthly and I am sending you herewith copies of the last two issues. I shall be happy to put you on *he regular umiling list if you wish.

Tours sincerely,

H.r. Vobb Secratury General

(11240) RESTRICTED

D.J. Moss, Esq.,

Far Eastern Department, FOREIGN OFFICE.

Entr

же

With the compliments of

THE COUNSELLOR (COMMERCIAL)

به رویاه

Puss Me 2014 then pa.

THE OFFICE OF

THE BRITISH CHARGÉ D'AFFAIRES

PEKING

1 April, 1967

(11240)

RESTRICTED

Office of the British

Charge d'Affaires,

PEKING.

1 April, 1967

RECEIVED IN

ARCHIVES No.31

1 3 APR 1967

FC6/1

I should perhaps just put on record that Roland Berger of the "48 Group" has been in China for nearly a month. He spent ten days in Shanghai at the beginning of March and then a couple of weeks in Peking. I believe he left on Easter Friday He was supposed to be returning to Paris before going to London. As far as I know he was on his own although while in Shanghai he visited Jack Perry in hospital and on one of these occasions had a brief chat with Peter Hewitt of our Changhai office.

2. Berger made no attempt to get in touch with me and I only heard a little of his activities here from a member of Jardines who was staying in the same hotel. Berger called on a number of the corporations and was seen one day with Techimport. He remarked that he found the Chinese so much easier to deal with Inow because they were so refreshingly frank about their problems.

3. I am sorry that this is all so vague but since it would have been unsuitable for me to seek Berger out myself I can only pass on these brief impressions for you.

I am sending a copy of this letter to David Moss in the Foreign Office.

(T. Peters) Counsellor (Commercial)

A.K. Rogora, Esq.,

Commercial Relations & Exports Department,

BOARD OF TRADE.

RESTRICTED

(43

RECEIVED IN

ARCHIVES No.31

1 1 APR 1967

Febli

EuRa

Issued by the Sino-British Trade Council,

the officially recognised body for the promotion of Sino-British Trade

Pily

Sino-British Trade

Toglance at page 1. pagal.

China's World

Trade Increases

Arganes

здра

March 1967

No. 30

Am Dayfor

They pa

14円

Countries

1965

Imports Exports

Total

£462mm,

430

892

165.4

144.9

310.3

627.4

574.9 = £1202.3m.

Figures so far available indicate a continuing rise in China's foreign trade during 1966. A recent Japanese (JETRO) Survey based on incomplete returns, estimates that China's world trade last year reached a total of approximately £1,487 millions as against a previous highest total-in 1959- estimated at £1,445 million.

A survey based on incomplete returns is by no means satisfactory, but Westerners and seemingly Japanese also are very prone to submit im- portant matters to statistical analysis, and in the absence of annual retums issued by China itself, few outside China will blame the analysts for at least attempting to assess the importance of trade with China to the rest of the world.

1965 figures are now available from most main non-Communist and Com- munist trading partners, and on this page we give sufficient evidence of increased Chinese exports to the middle East in recent years to warrant anticipa tion of higher totals for 1966 in several main areas.

1966 figures are less complete. Im- portant partners for which we lack figures at present, include: Argentine, Ceylon, Malaysia, Pakistan and most Middle Eastern countries. Nevertheless, available data are interesting enough for us to reproduce in this issue.

It is not possible to say at this stage whether trade with E. European nations declined further in 1966. Recorded figures for 1965 compared are follows:

China's trage with Non-Communist

China's trade with Main Communist

Countries

TRADE WITH CHINA 1965-66 COMPARED

Imports from China

Exports to China

1965

1966

1965

1966

Australia

10.42

8.40 (11)*

60.1

28.09

Canada

4.78

5.62 (10)

34.82

51.340

Hong Kong

145.1

173.00

4.50

3.80

Japan

80.9

110.2

88.20

113.400

Singapore

23.89

31.7

0.49

16.0.

United Kingdom

29.7

33.820

24.88

31.92

France

15.9

17.72 (11)

21.5

31.45

W. Germany Italy

Austria

26.0

32.92

28.2

46.09

13.71

18.1

(11)

20.15

19.20

1.76

2.76

(11)

0.61

1.22

352.16

434.24

281.45

342.51

Analysis:

* Bracketted figures indicate 10 or 11 months total only for 1966

The roles of Australia and Canada as suppliers of wheat seem to have been reversed. China's total 1966 imports from the two countries may equal those for 1965 when 12-month figures are known, but Canada now is the larger supplier.

China's exports to Japan, Hong Kong and Singapore significantly increased over the period and may be expected

The Sina-British Trade Council le sponsored by: The Association of British Chambers of The Chìm Amacistion. The Confederation of British Industry and the London Chamber of

DOBNETCH.

to increase further as recent sales activity in the relatively nearby Asia and Middle East countries takes effect.

France still imports at a very low level by comparison with her rate of export growth.

Increases in Japanese and West German exports to China seem to belie the claim that trade and a suitable political atmosphere go hand-in-hand."

The United Kingdom is still China's best customer in W. Europe.

}

Trade Reviewe

Suo-British Trade Review

International Trade

Exports to China for Fan/Nov. 1966

were £19.2 mill, an mcrease of 4.9%.

Large dans were chemical fertilizers ((2) mil), uron and steel and moter

Isports for the sama period

were 118.1 call, up 40%. The principal Bent were silk, hides, oil sends and dried vegetables.

W. Germany

Exports to China in 1966 (£46 mil.), showed an increase of 63% over 1965. Importa si £23 nul, were up 27%.

Two dissel locos each devsloping 4,000 cv were shipped from Hamburg to Tringtao in January. Those are the Best of four ordered from Rheinstikt. Henschel.

West Gemma stent firms received fargo orders from China during March.

Sweden

Swedish stoel representatives recently in Peking received orders for stainless steel for use in fertilizer plants.

Demark

At the Danish exhibition which opened on March 2nd, a certain amount of unde Interature boining a symbol depicting Copenhagon's famous Mar- maud was withdrawn. Tasks differ, and what is acceptable in me market may not be suitable for another, SITC K abours ready to advise British com- pundes on thle mantler.

The Danish exhibition, covering 3,600 sq. meters, included exhibits from the shipbuilding, diesel engine, refrigora- tion and electronic industries. Danish trade for 1966 - Importa, US $112 mil; Exporu 25 mil. Poland; Ships

Poland, which built one vessal for China in 1966, has received orders for two more cargo ships of 10,500 tons cach

Sino-Polish trade in 1966 totalled US $48 mil., with a balance of approxi mately 1 million in favour of Poland. Exports moluded ona skip, cars, con blue harvesters, special vehicles, diesel engines, machine tools and coal mining equipment. A dry deetillation plant (wood alcohol), was commissioned near Harbin by Polish, mngineers, and began speration in 1966.

Romania: Ships and Trucku

Three cargo vesels of 3,150-4,400

DWT were delivered to China in recentL months. A consignement of SR132 CAR- PATI Lucka has also been delivered.

Long: Air Transport

Inqui Airways has accepted the Chiness offer to negotuto a 2-way com sirines agreement. A Chinese delegation is invited to Baghdad.

Hong Kon

Imports from China in recent months have continued at a high level, though somewhat below the $287 mit recorded in December 1966. January imports at $240 mil. the still above the 1966 monthly average of $230 mul.

TRADE AGREEMENTS

A protocol on the promotion of friendship and trade between China. and Japan was signed in Peking on February 27th. The signatories Weve representatives of the China Council for the Promotion of International Trade and of the Japanese counterpan. Agreement was reached in holding compre- beserve Japanese industral ta hibitions in two Chinese ciles in 1968 and two Chinese exhibitions in Japanese cities in 1969, and on the smooth promotion of manne transport between the two collintries. Rumania

A Sino-Rumanian trade and pay- ments agrement was signed an Bucharest in February. It provides for a further increase in the volume of trade. China is to supply Rumania with mineral products, rolled steet, hard alleys, bibes, chemical products, textiles and light industrial products. Rumania's exports will include drilling equip- ment, cargo vessels, tracks, chemi- vals, petroleum products and stoel tubos

(Sino-Rumanian trade a esti- mated to have noen from £17.5 mil. in 1965, to approximately £20 mil. in 1966).

Vinuritania

nical

A truda and sconcmic and tech- co-operation Agreement between China and Mauritania was signed on February 16th.

Cotton goods are reported to have increased in price by some 10%.

China will supply equipmeal to a value of P.Rupees 500,000 for a train- ing Institute in which 200 Pakistan technicians will be trained for w the heavy asdustrial complex in đi up there. The complex will be equipped bugely with China-made plant.

Japan

Exports to Chuma by Japan in 1966 were £113.4 mil. and imports E110.2 mul, representing increases of 2996 and 36% respectively. In 1966 the procipal export groups were crude materials £4 1 mul, chemicals £41.6 mil, manufactured goods £47,7 mil., machinery and trans- port equipment £16.9 mil. Mam im- ports were food 1449 mil., crude materials £40,5 mil, minetal fuels £5.4 mil, chemicals £2.8 mil., manufactured goods £11.6 mil., miscellaneous articles £4 mul

Fertiler

The Kegs Shimbun reports that China has agrood to purchase 2,120,000 tous of chemical fertilizers in terms of moumonium sulphate this year. Last year's purchase was 1,610,000 tons. The split as expected to be 984,000 tons of

ammonium sulphate, 462,000 tons of

ures and 120,000 tons of rechimed urea. The low price recently accepted for the 3 mil. ton tak by Nitrex has made Japanese supplers reduce their price to about 30% below those of last your which were $49.30 per ton C.L.F. for sulphate and 592 for ures. The price mentioned in the report for the recent ICI sale would mean that the quantity involved a about 100,000 tons. These three purchases total 5,220,000 tons as terms of ammonium sulphate, costing China something over £50 mil.

Oil and Grosse Testing

Shinko Zoki is to export a DT 5 type prosuse performance tostar to China. Last year they supplied China with ten lubricating od testars.

Iran and Sivel

The Japan Iron and Steel Federation state that steel exports to China in 1966. were 645,000 tons, a three fold increase over 1965. China was Japan's second largest customar. (N.B.) The Japanese trada returns give a higher figure then this for Ju/Nov. alone, being at a rough count about 870,000 metric tons. The man itoma in toos 1000 sue wire

rod 38, bars 171, plates and sheets 415. tinplate 54, galvanised sheets 36, hoop and strip 5, pipes and tubes 145.

Japanese stockmakers have con- traced to ship 8,057 tons of steel plates belsteen July and November according

V. following a contract for 84,308 tole of rolled steel made in December.

Nippon Kokan has contracted to sell to China 25,000 tons of steel pipe and tube, including carbon steel and seamless. The value is reported as about

U.K.-China Trade

Provisional Égures for United King dom trade with China for February

Imports from Ching Exports to China.

וי.

Although imports for the two months are less than those for last year by a sizeable margin, they are still well above the average for 1966. Imports of wool and vegetable oil February 1966 were exceptionally high,

The detailed figures for February 1967 are not yet available.

in January and

U.K. TRADE BRIEFS

Quinton Hazell Ltd have received an order for tractor parts.

British Physical Laboratories have received an order following participa-

in the SIMA exhibition Timulsin in September 1966.

Don

Scott Bader & Co. now has two specialists commissioning a plant at Changchow (Kiangsu Province), to pro- duce CRYSTIC polyester resis. Chlem technicians familiarized themselves with the equipment at the Company's UK. factory before returning to assemble the plant with Dr. J. Umfrevill and Mr. E. $. Goldbum in China. The resin is used in manufacture of glass. Abro re- inforced phatics.

There has been news recently of a good flow of enquiries from China. though it is too early to say what volume of business will resul.

Communications with the trading corporations remain good, but business

£2 mil and follows sales made direct by the same company last year for a total of 78,000 tons. The present con- truct includes carbon steel and seamless tubes.

Leipelg Fair

China was not represented at this year's Leipzig Fair. It may be recalled that Chinese exhibitors withdrew their exhibits last year when local authorities objected to certain publications dis. played on the stands.

and for the first two months of the

Feb. '67 Jan/Feb. '67 Jan./Feb. '66

2,791

5,953

7,095 1914

4,205

4,562

4,459

10,517

11,564

Arms and SBTC is particular look for- ward to the time when trade delega Lions from China visit this country large numbers again.

In the meantime, our own busines repenscntatives are preparing to visit China for the Spring Fair, and it may be that this renewed direct contact will lead to further visita in both directions

Peter Marshall of 5BTC wi attood the Fair, and his account of the proceedings will be included in our next

LAUNCHING MS. JINSHA

A large crowd attended the launching of M.S. Fincha a Doxford's Yard, Wearside, on March 14th.

Jinsha, sister ship of the Dunbuang. is the second vessel to be built for China by the Dosford & Sonderland Shp- bullding & Englevering Ca. Ląd, and like the Dunhuang, is a 485 f. 15,000 Ton cargo vessel.

Photographers and BBC reporters stood close as Mr. C. Stephenson of Doxford's, who has been in charge of the project, introduced Mr. Hoang, Wen- Chen, Chinese Commercial Secretary, who undertook the faunching ceremony on behalf of the China National Ocean Shipping Corporation.

After saying a few words of thanks to the shipyard workers, Mr. Huang

cut the ceremonial riband of red silk which strained in the high wind, bak- ing the bows of the ship to the launch- ing dain, and majestically she took to the water for the first time. The great piles of anchor chain used as a drug brake paid pot noisily behind her to slow the mermentum as the bugs took over, and Jinsha was truly beautiful as They drew her to her berth.

In China, the ceremony would be accompanied by frocrackers and drum- ming, but they simple ceremony carried out in a bleak northem yard lost noth- ing of its impressiveness, and many a toast to her was raised around Wear- side that night.

the

On behalf of SBTC. Peter Marshall presented a guest book to Mr. Tang Wen-fa representing

ship's company.

A similar book was sent arlier to the Dunhuang, now on her maiden voyage at Rotterdam.

Mr. Stephenson acted as host for Desford at a bunch dinner given al a local hotel that evening.

The two shups have been built to a precise and demanding specification. and this has necessitated very close co-

between the operation

Chinese inspectors and the shipbuilders. Dox fords have overcome many dificultas during the building process, but they have gained a unique understanding of China's requirements.

They are now suprecsely oquipped to fall further orders for China, and anyone seeing the ships already pro duond will have no doubts at all about the quality of the vessel they build.

Good luck Jinshu, and good kick Doxfords!

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Sino-British Trade Review

Shao-British Thode Review

U.K. JANUARY IMPORTS FROM CHINA 1966-67 COMPARED

(la 2'000 Sterling)

Chin's Exports to :

1962

193

1964

1965

1966*

Meet &

1967 133

1966 119

Crode animal & vegetable masterinks

519

314

Bristles

140

Bahrein Egypt

225

369

509 684(9)

JLI

6,356 7,007

6,371

9,552

8.220(6)

Rabbit

popia

406

539

655

#1...

***

Pig products

Vegetable

3,305

478

5,188

6.043

Soyabean oil

561

Tung oil

Isnel...

Chemsleal elements & compounds

115

Jordan

431

715

724 1317

1PT

Rice

Disential olu

Kuwait

LJI

792

1.4.

4.35

44.

Chentiendi thek

741

941 1,298

---

SOROTANA

Rovin Gelatin

216 104

---

$25 1,714

201

393

01.

1,361

1,523 2,340

2342

188(6) 696(3)

1,331

1,072 1,920 2,062

AJ.

Hide

長

Oll reads & I

Testle

Pur skina undressed

14,326 (16,78)) (19,851) (27,897)

905(6)

*Incomplete total. No. of months indicated by bracketted figure.

Note: a Saudi Arabian figures are for trading yours ending Tume 162, May 163 and May '64.

Frakt & vegetables

Lebanon

Tinned fruit

Libya

Preserved ginger

Für dina, deemed

Saudi Ambia

Apricot kernels

Wood & manda

TOL

Paper & monofs.

South Arabia

---

Cocoa butter Te

Textile yarn, fabrica & made-ups

302

Sudan

Grey cloth

Syria

166

Silk fabrics

166

Carpets

Non-metalle misera man

啡

Silk

112

Glasswire Pottery

Wool

420

Non-ferrous metals

124

Canel

Tix

110

Other base metal

1967

1966

Metal manufa

243

133

Clothing

Tungsten

Manganeso

Molybdenum

TOTAL

2077

3,031

U.S.S.R.

50.1

15.0

Hungary

615

E. Germany 10.0

Czechobakia. 23.0 Poland Roumania 11.9 126 13.4 9.0 13.4 13.2 0.8 11.5

20.2

27.2

15.7

12.7

196

Bulgaria

7.0

6.0

Albania

N.A. 0.03

Yugoslavia

17,1 14.1

Texti

U.K. JANUARY EXPORTS TO CHINA 1966-67 COMPARED

*** | E*@*=*=§*

114

Machinery, non-electric

Wool tops

Wool nat

Machine took Mining machinery

#18

Man made bres

& compon

acliory, electric

Dycling &

Metal moulde

Telecommunications Measuring & scientific

127 150

174

122

Transport equipment

619

Motor cars & parta Lorries & dump trucks Aeroplano parta

Sete

Iridium Copper

119 75

& control Instruments

Optical & photographic

TOTAL

2,648 2001

Teile

Iron & discl

Non-fo

blrles de

China's Exports to the Middle East

The steady increase continums, and even the incomplete figures for trade with China now available, Indicate that

her trade position in the area de lan-

proving by comparison with certain Comecon countras Daly Czechoslo- vakia and the USSR. of that group now sell more to the Middle East,

though Yugoslav exports are almost comparable. It will be necessity to havO precise figures for exports to Kuwait to complete the analysis up to 1964.

Exports to Middle East Compared

1964 1963 1964b 142 (168) (19,9) 40.2

- Exchading Kuwait

46.0

0.001 16.8

A Chinese Trade Fair was held in Kuwait in January, Products from China appear to be commanding in- creating interest. from some marchants. In particular, foodstuffs are competing with Australian and Continental supplies, and substantial quantities of icon and steel are Mid to have been imported from China.

Industry

Reports from Shanghai describe how the loss of output arising from disorder in a wide range of industry during the

b Libya 1961-233.

Best ten days of the year has been more than made up by the end of the month. Items specifically mentioned in

has manufactured in three months a 2,000 KW packaged steam turbine.

The Tsingtao plaque plant bas succeeded in manufacturing nylon 1910 which is being used for exule machinery parts, machine gears and bearings.

Agriculture

Peking reports that China has over- fulfilled its grain purchasing pho for 1966-67 ahead of schedule, the year for this purpose being April 1st to March 31st. Quantities bought have mached 104.5% of the target. The present food gain situation is said to be better than in say of the four preceding years. The Northern provinces, despite their less favourable climatic conditions, have recorded specially big increases.

In the first ux weeks of the year. Shanghai despatched 110,000 tons of ammonium sulphate and urea to rural Four hundred elecine ploughs, tractors, pumps and engines have also been distributed. Five times as many electric ploughs will be avail- able in the province than last year.

this context were 7 hp. tractors, for SBTC Affairs

tilisers and plastics. The January targel for tractors was quoted as 400.

The Sun Electrical condenser plant which was built to a foreign design has recently made trichloro- benzene-filled condensers, a one million volt high tension standard capacitator and China's first impulse current generating set. The last named is of 400 KW seconds, 2,000,000 volts and 500,000 amps.

The Anshan Steel Works is now producing steel rails 25 metres long.

A Peking factory has made a first consignment of high precision digital voltmeter with five figure numbers.

(c) A Tienṣin plant is replacing im- ported grinding wheels with a local product incorporating roain and 1 graphite filler for giving a super fish.

The Shanghai No. 2 Machine tools plant has built a high procision 200 min spacing machine, with an electronic counter for use in the instrument mak... ing industry. It is accurata to within two millionths of a metre.

At the launching of M.S. Jinsha an March 1942, Mr. Ronng Wen-Chan performed the bunch ceremony on behalf of the owners. By kind invita. tion of the shipbuilders, the Doxford & Sunderland Shipbuilding & Engineer- ing Co. Ltd., Peter Marshall represented SBTC at the ceremony, and at the celebration dinner given by the Com- pany, where Mr. C. Stephenson of Dox- ford's was host.

anton Fair

Peter Marshall will attend the Spring Fair at Canton, arriving on April 13th.

SBTC Scotland

Norman Webb, Secretary-General of SRTC, will visit Scotland for a belef fxmilanceation tour during the next few weeks. He will have discussions on China trade with Hamish Grant, Scot- tish Secretary of the CBI, representing SBTC in Scotland, and with Assistant-

The Tsingtao Steam Turbine plant Secretary Charles Granl

Sino-British Trade Review

PUBLICATIONS

For companies that have trade in the Far East and for those who do not, but want to know about the possibilities, the Far Eastern Economie Review 1967 Yearbook provides a comprehensive and extremely well presented survey of the main economic problems of the region and the current situation of major industries and commodities, and a review country by country of the events of 1966 and the prospects for 1967. It is compiled by the same well informed staff and correspondents who contribute to the Far Eastern Economic Review so that uniformity and con- tinuity is to be found in the record of economic, political and social develop- ments of the various countries in the region.

The Regional Survey occupies two thirds of the book and covers 26 countries. With the exception of a few of the very small ones each country is dealt with under nine headings-Politics,

Foreign Relations, Social Affairs, Economy, Finance, Trade, Agriculture, Industry and Transport. It is natural that one of the largest chapters should be devoted to China, and this in tum tends to be dominated by the Cultural Revolution, the progress and develop- ment of which is described sensibly and without any hasty conclusions being drawn.

For those engaged in trade with China the lack of reliable statistics and other information is always a handicap and for this reason the chapters on the Economy, Trade, Industry and Trans- port will be invaluable since the Far Eastern Economic Review manages to assemble what is available into a co- herent and credible whole which is unavailable elsewhere.

Chinese survey of Tan-Zam rail link The Chinese survey of the Tanzania- Zambia rail link has now been put before the president. The survey covers

the 300 mile stretch from Kidatu, a rail- head 170 miles south of Dar-Es-Salaam, to Dodoma on the Zambian border. A similar survey has already been sub- mitted by British experts. The Chinese government is to assist Tanzania in the construction of a £5 million deat Kidunda on the Ruvu River, whiWill incorporate a hydro-electric generating plant as well as provide storage for irri- gation purposes. Chinese experts are at present completing a survey of the Ruvu River scheme following similar surveys undertaken by French and FAO missions in the past.

Rabbit Meat

In reply to a recent question in the House of Commons regarding imports of rabbit meat it was stated inter alia that total imports from all countries for the last three years have been £164,023, £160,959 and £211,243, and that im- ports from China were £28,177, £33,950 and £67,725.

DAM.

A number of subscribing companies have requested

extra copies for forwarding

to their overseas staff,

subsidiaries, etc.

We are pleased to be able to announce that these

are available at a slight reduction for all copies in

excess of one.

Printed in England by Rawlings & Walsh Led.. Windsor Street, Chertsey.

Sino-British Trade Council

中英貿易协会

President: Mr. John Keswick C.M.O.

Sponsors: The Association of British Chambers of Commerce

The Federation of British Industries

NFW/FEC

The China Association

The London Chamber of Commerce

21 Tothill Street, London S.W.1 Whitehall 6711

President and

Executive Council.

Dear

вим вного,

5th April, 1967

Euth

жи

I send you herewith minutes of

yesterday's meeting.

As regards Item V, I understand from Hr. Thorneloe, Director of the B.A.E.C. that they support the idea of a series of visits by lluang Wen-chun and his staff during this year and that he is working on the project.

Yours sincerely,

RECEIVED IN

ARCHIVES No.31

~ APR 1967

есь FC6||

N.F. Webb

Secretary General

IB.C. 1Jupe

Noted

ARY

blu

[

Sino-British Trade Cownicil

"inutes of the twenty-second noeting of the Executive Council held at 11 a.m. on Tuesday the 4th April 1957 at the offices of Intheson & Co., Ltd., 3 Lombard Street, London E.C.3.

Present

Tr. John Kesvick, C.M.G.

ir. J.F. Erailey

r. J. Eroreton

Ir. H.J. Collar, C.B.E.

Kr. E. Hodgkin

Kr. A.E. Karker

Mr. W.H. McNeill, C.B.E.

Mr. B. MacTavish

Mr. R. Reid-Adam, C.B.E.

Mr. J.A. Stafford

Fr. K.S. Stebbing

Fr. E.S. Taylor

Nr. N.V. Waite

Mr. H.B.

Williams on

Secretariat

Hr. N.F. Webb

Mr. P.S.

Marshall

President of the Sino-Britishı Trade Council and Chairman

Apologies for Absence

Apologies for absence were received from Messrs Bibby, Gilbert, Moss, Seward and Bullard,

Item I

Nembors of the Council

The President welcomed Mr. W.H. McNeill, newly joined menber of the Council.

He also welcomed ir. I.J. Collar, whose position as Secretary of the China Association had been assumed by Mr. H.B. Williamson, as a full member of the Council, and said how glad he was that we were to continue to have the benefit of Mr. Collar's experience over many years.

Item II - Minutes

The minutes of the twenty-first meeting of the Executive Council held on the 3rd January 1967 were agrood and signed,

Item III

General Situation and Canton Fair

The President said that he was not happy with the present situation as he felt that Britain was not doing very woll, though evon this was not quite clear. Day to day business seemed to be standing up all right, but he was worried about the activities of

He referred to our competitors, particularly the West Germans. the political influences of Vietnam and the Kosygin visit and the unpopularity of Mr. Wilson with the Chinese, On the other hand it was clear that the cultural revolution was not over yet. This

had not interfered with foreign trade as much as it might have done but might account for the lack of news of any visiting missions to this country or indeed to Europe.

ir. Heleill, who had recently returned from China, reported hat his party had not been able to renew contacts in the Corporations which had been made previously, and their negotiations were made with a new set of people. It had been difficult to get them to talk business since most of the time the delegates wore subjected to criticism and propaganda. Tlicy

They were very critical of the British attitude to Kosycin, but the Dutch dologate bore the brunt of the attack on account of the recent shooting incident in an R.I.L, ship in Australia. The Danes had apparently done well in their exhibition, particularly Burmeister and Vain, but the Swedish were very unpopular over the cancellation of thoir exhibition.

So far as shipping was concerned a new system of berthing and turn around had been set up last September for the liner shipping but the revolution had prevented this working properly. The port of Tsingtao shows impressive development. Another Japanese line is being admitted to Chinese ports for loading for Europe provided that they undercut the ratos.

The President referred to the Canton Fair which was now to bo r be called the Kwangchov Fair, and said that . Marshall would be attending - It was thought that quite a lot of British businessmen would be going and that the Chinese might be trying to make this

record fair in order to domonstrate the success of the revolution.

The President said that he himself had obtained a visa for Canton and would probably attend the opening of the Fair IIe said that ho had had a message from Theo Peters to the effect that Hou Tung was asking the heads of the Corporations whether they would like to see Mr. Keswick in Peking, but as they were wider criticism for following the capitalist path he did not know whether they would want to see a capitalist from the West. He did not want to go to Peking on this occasion but would do so if invited, but he thought this unlikely.

Item IV

Technical Journal

The President said that he was very keen to go ahead with this project and it had the support of the Board of Trado, Foreign Office and of Theo Poters. There was no question of a direct grant from the Board of Trade and the subsidy would have to be covered by S.B.T.C. itself through its normal budgetting procedure with E.N.E.C. A new and complete dumy in English was being prepared and he would take an early opportunity to put it up to the Chinese, possibly in Canton. He had mentioned it to Kuang Wen-chun at lunch the previous day and his reactions had not been unfavourable.

Mr. Bramley said that once the project was launched it was very desirable that it should not be allowed to become stereotyped, and suggested that each issue should have some special features.

- 3 -

Itom V - Agricultural Exhibition Pronosal

It was reported that Mr. Parshall was writing a paper on Agriculture in China which would serve as an introduction to the subject for those who might be interested in the exhibition proposal. He would ondoavour to highlight the areas of greatest potential for British exporters.

Koanwhile roasures were being taken to set up a programme of visits to shows and other agricultural undertakings this year for uang Wen-chan and his staff. This was being considered by the Finance and General Purpose Committee of the E.A.E.C. at their meeting on the 4th April.

•

Ir. acTavish mentioned a report from Thao Peters to the effect that he had spoken to iou Tung about an agricultural and other exhibitions and the reply had been that they were very busy in 1967 but afterwards they would consider proposals

Iten VI

5.5.0.0. Accounts

The Secretary of B.N.E.C. had approached us with the idea of assuming responsibility for S.E.T.C. accounts in line with the other bodies financed by D.N.E.C. Our accounts are handled by C.P.I., but being made up quarterly are received by D.N.D.C. ruch later than the others. It has now been agreed however that C.E.I. will bill us monthly for the services they provide and monthly accounts will be kept by the Secretary Genoral, By this arrangement progress reports will be sent to .N.E.C. in line with their requirements, but S.D..C. will retain the independence which is deemed to be desirable.

Iten VIII

Other Business

(a) The President referred to the circular letter which had been sent to members of the Council by Miss .E. Brown who had been employed in the Secretariat. No described the circumstances leading to the decision to terminate Miss Brown's erployment and the arrangement to give her five wooks notice, though her entitlement was two wooks only. He said that the Working Committee had had a full discussion of the case at their meeting on the 31st l'arch and had come to the conclusion that there was no reason to alter the terms of the termination of employment. The Secretary General would write to Miss Brown accordingly.

(b) The President referred to the kind offer of ¡r. Brereton to hold the next meeting of the Council at Vickers Offices, which 'would be followed by lunch. This was accepted with many thanks.

It was agreed that the moeting, which will be on the 4th July, will start at 11.45 a.m.

SB Sino - British Trade

Trade Council

中英贸易协会

President: Mr. John Keswick C.M.G.

The Amociation of Brickh Chamber of Commerce

The China Association

The London Chamber of Commerce

The Confederation of Beltish Industry

Our ref: NFW/VR.

CONFT DEN TI AL

RECEIVED IN ARCHIVES No.31

-4 APR 1967

Executive Council

тсы

De ar

fur moss.

Enthax.

I have told the SBic that

I shall not cattend.

21 Tothill Street, London S.W.i Whitehall 6711

p.a. sprs. 4/4

29th March 1967.

Council Meeting on the 4th April ·

11 a.m.

Further to my circular letter of the 15th March, will you please let me know if you will be present at the meeting on Tuesday the 4th April. The agenda is as follows:

(1)

(2)

Introduction of Messrs McNeill and Collar.

Confirmation of the minutes of the Council meeting

of the 3rd January 1967.

(3) Canton Fair and General Situation.

(4) Technical Journal.

(5)

Agricultural Exhibition Proposal.

(6) S.B.T.C. Accounts.

(7) Other Business.

Some of you will have received a letter dated the 13th March from Miss M.E. Brown who was employed as Assistant in the Secretariat until the 5th January of this year. Members can be assured that the full circumstances were taken into consideration when kiss Brown's employment was terminated and she was paid more than the entitlement under our rules. Should you wish to have further information please let me know. In any case the matter will be raised at the meeting under item 7.

Yours sincerely,

N.F. Yebb Secretary-General

(1301) RESTRICTED

C.C. Wilcock, Esq., Foreign Office.

With the compliments of

COMMERCIAL SECTION

(A. J. Hunter)

THE OFFICE OF

THE BRITISH CHARGÉ D'AFFAIRES

PEKING

27 March, 1967

FGD.

de!

Regepla A&

RESTRICTED

(1301)

Office of the British

Charge d'Affaires,

PEKING.

27 March, 1967

RECEIVED IN ARCHIVES No.31:

3 APR 1967

FC6/1

Thank you for your letter IT 3863 of 10 March.

2. We delivered our Note to the Kinistry of Foreign Trade on 23 March, in the form enclosed with my letter to you of 1 March and with the dates and enclosure which you provided. This givea than two clear weeks before the deadline. We will of course let you know promptly if they reply.

3. In the third paragraph of your letter under reference you ask us to draw the attention of the Chinese to recent instances in which they have not followed the neat import regulations. I do not think there is any point in our doing this unless you can provide us with full details of the consignments concerned, a.g. bill of lading nos., date of arrival etc. Their first reaction is bound to be a show of ignorance, and we can take the matter no further without these details. Ve shall therefore wait to hear further from you before acting in this matter.

I am copying this letter to Wilcock in the Foreign Office and Rogors in the Board of Trade.

(A. J. Hunter)

First Secretary (Commercial)

J.C. Tibbels, 48q.,

Ministry of Agriculture, Fisheries and Food,

Whitehall Place,

London, 1..1,

RESTRICTED

中

英

貿

Reed. 1/3/67.

Sino-British Trade Council

With Compliments

Hove piw.

...

会

Do we kaaplasse? I canner fund anything in my noom. If we don't kapp then

I/we destroy. Oturusi, p/w

S.W.D

21 Tothill Street. London S.W.

Telephone: WHitehall 6711

31/2 pa

PLE:G & STASTICS

SINO-RTTISH TRADE COUNCIL

:EMBERS' LÆRARY

RECEIVED IN LARCHIV: 5 No.31

31 MAR 1967

FC6/1

Accession list nine

Accession No:

COL 0367 - 49

details

ECONONIC DEVELOPMENT AND THE USE OF ENMERCY RESOURCES E. COMUNIST CHINA - by YUAN-LI WU ¿ !!.C. LING

Published by PRAEGER, for the HOOVER Institution, London 1963. With a Supplement: containing full lists of principal thermal and hydroelectric power plants and coal mines (on order).

Hain reasons for writing the book, according to Dr. U, were to study in detail, a sector of the economy which is and will be a rain factor in future industrialisation, and to examine the application of planned development in a single sector of the econory.

The supplement (now on order), in addition to lists of plants, contains projections for future devolop- rents in the power-generating field, based on data which he claims give sufficient indication of planning trends for development of energy resources since 1958.

Chapters are:

Electric Power Industry 1949-60

Coal Mining

Supply of demand for electric power & coal

Use of power resources in national & regional development Petroleum Industry, etc.

203 pv. plus 5 maps, 29 pages of notes, & appendices containing statistics on Generating capacity & Power production 1949-50, & coal production 1935-60. Index. Supplement.

BACKGROUND STUDIES

Accession Not

details

CO. 0367-48

COL 0367-46

SHII CHUNG CH

THE STATUS OF SCIENCE & EDUCATION IN COMMUNIST CHINA, AND A COMPARISON WITH THE USER by SHII CILENG- CHIN. Union Research Inst. Hongkong. 1962.

An extremely informative source on projects originally commissioned under the revised "12 year plan for developing Science & Technology", originally due for completion by 1967. Outline subjects for research are given for the following sectors:

Chemistry, Physics, medicine, agricultural sciences, construction & machine-building.

A complete section on Academia Sinica gives details of organisation and personnel, research institutes etc, and the narrative goes some way towards building up a picture of the scientific organisations in transition from 1950 - 1960.

76 pp. cyclostyled, no index.

URBAN COMMUNE EXPERIMENTS IN COMMUNIST CILINA, by SHIH CHENG-CHDI, CHENG CHIl, Union Research Institute, longkong 1962.

A study of experiments to date in setting up urban communes centred on specific rines, factories, city wards etc., with some interesting notes on wage structure in industry, women in industry, organisation of different communes etc.

164 pp. appendix, no index.

REFERENCE & BILIOGRAPHY

Accession Mot

details

FROM 357-47

THE GOVERNMENT OF COMUNIST CHINA,- Coorge P. Jan (Ex) Chandler Publications in Political Science, San Francisco. 1966

A useful handbook.

Section Headings are:

Ideology, The Party, The Constitution, Legislative, Executive & Administrative Organs, Law & Justice, Economic Development, Communes, Thought Reform, Military Forces, Foreign Relations.

Excellent bibliography.

676 pp. plus appendices, bibliography & index.

PERIODICALS

Accession No;

CQ 766-39(5)

Details.

The China Quarterly

Oct Dec 1966

Comp/2

E. Bolland. Esq..

Foreign Office.

BOARD

TRADE

mr. Shearge

With the Compliments of the

Assistant Secretary

B. Mac Tavish

BOARD OF TRADE

Entel

Commercial Relations and Exports

い

Tel. No. ABBET 7877 2637

FLCEIVED IN ARCHIVES No.31

28 MAR 1967

FC6/1

23rd March, 1967.

I have just received a letter from Thee Peters in Peking in which he describes his first meeting with Bo Tung sings he arrived baek in Peking from his recent spell of leave in the U.K,

After a general discussion on Bino-dritish trade prospects for 1967, during which To Tang said that the cultural revolution Wa now turning to great efforts to increase Chinese production, and that he hoped therefore that Sino-british trade for 1967 sould, in 1966, again be a record year, the discussion turned to your impending visit to China. On this Peters reports as follows;-

"There ma then some dismission about Mr. Keswick's movementa and those of Kr. Marshall. Ho Tung said that although KP. Keswick bed only mentioned a visit to the Canton Pain in his reces letter to hẳn he knew from previous letters that är, Keswick was most anxious to visit Peking. Ho Tung himself had therefore decided to ask the import/export corporation managers if they would be prepared to mest är. Keswick here in joking in April. With great frankness No Tung ssia that the poor car- poration managera vara at present being actively and violently criticised as having followed a capitalist path, Me aid not therefore know if they would be prepared to give interviews to 'one of the leading capitalisis from a western country'. He implied that he thought they ought to meet Kr. Xoswick and that he himself was very interested in learning the remits of his enquiry."

Pinally řetere and No Tung talked about plans for exhibitions in China. Peters said that we had no plans for any exhibitions this

which do Tung said was a good idea becomes everyone was so busy. ile hoped that we should have firm proposals for exhibitions any time after 1967", and noted that in this connection ve haped so have proposals for another scientific instruments exhibition and also for an agricultural exhibition.

I am sending a copy of this letter to Bolland in the Foreign office.

J. Keswick, Beq.,

Katheson à Co. Ltd.,

3, Lombard Street,

London, 2. c. 3.

(3. Masfavish)

Enter:

RECEIVED IN ARCHIVES No.3:

SBI Sino - British Trade Council 17 MAR 1967

中英贸易协会

President: Mr. John Kerwick C.M.G)

Tebli

The Amocules of Brical Chamber

THE CA

Association

The Confetention of Brislah Induny

London Chamber of Commerca

*P:/FEC

To Members of the Executive Council. Sony to the President.

Aur Moss.

Dear

21 Tothill Street, London 5.W.1 Whitehall 6711

15th March, 1967

Provisional figures for Fobruary are as follows:-

(2000's)

Imports from China

Exports to China

Fed.

Jan/Feb 1967

Jan/Feb 1966

2,791

5.955

7,095

1,914

4,562

4,469

4,705

10,517

11,564

May I remind you that the next Council meeting will bo on Tuesday 4th April at 11 a.u, at the offices of atheson & Co., Ltd., The Agenda will be advised later.

Yours sincerely,

O-

and

q attend

Oceanún

leave

cultand

the

N.F. Webb Secretary General

DAKI 31 Manur

those meetings

might be

ARe

메

The

substantive

F.D. observer,

cry oll

following meeting

meeting in

July,

thou

16/0

Ente

Our reference Your reference:

CHE 17291/0

BY DIPLATNIO WIR B3

BOARD OF TRADE

th.D. Moss (26 Faregn Office

Corre rcial Relutions and Aports Department

1 Victoria Street, LONDON S.W.1 Telex: 25955 Answer Bock: BOTHQ LONDON

Telegrams: Advantage London S.W.1

Telephone: ABBEY 7877, ext.

6th March, 1967

RECEIVED IN ARCHIVES No.31

- 9 MAR 1967

FC6/1

FC6/131

This is a mystery.

Thank you for your letter of 21st February about the Financial Times article of 14th February and the reference to two contracts. The article vis wyparently vri ten by Dick Wilson and Norman Webb has already naked sim hat the contracts are Either Wilson does not know, or if he does is keeping quiet for some reason or other. Alteratively, dornan thinks he may te flying a kite. I do not know Dick Wilson myself but I cannot see what purpose this would serve. The Pinnacula fines itself denier any knowledge of the contracta, so i am nômaid that we are unable to help you. our eles open and will let you know if anything turns up.

Anyway we will keep

I us copying this letter to David Yoss at the Foreign Office.

(A. K. Rogora)

Nustat

2. J. Hunter, Esi.,

I will try to remember to ask home when of, I wents see him.

First Secretary Commerce Bus Lureaks/

"fice of the Tuttigh Char

Peking

2utcal

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Read: 6/3/67.

中國

英

Sino-British Trade Council

貿

易

With Compliments

协

会

RECEIVED IN

ARCHIVES No.31

- (c) MAR 1967

FC6/1

21 Tothill Street, London, S.W.1 Telephone: WHItehall 6711

Ente + pa

дом

نة

6/ü

Kemorandum from

7.5. arshall.

CONFIDENTIAL

General:

Record of a meeting with Huang Wen chun

arch 1st, 1967

The outside of the offices is now shrouded in scaffolding and it looks as though the building is being repainted. Huang Wen-chun told the doorman to call Li Wen-chun as we entered the front room for our talk. The general atmosphere was jocular and at times punctuated with roars of laughter and slapping of thighs. Everybody appeared very much at

ease,

Topics discussed:

Ifuang said he had been disappointed that I had been unable

The to join his party on board M.S. Dunhuang yesterday. Chinese themselves only knew late on Thursday that she would be ready for handing over on Monday, February 28th. However, she still had not left dock, as minor adjustments and replacements were still being made as a result of the Sea Trials the vessel underwent last week. I explained the circumstances which made it impossible for me to attend the handing over, i.e: that Doxfords failed to inform us of the date and time of the ceremony, despite repeated telephone calls, and informed us on Monday morning only after we had telephoned then, that I should be in Sunderland at 3 p.. that day. The only airline operating a service to Newcastle, the access point to Sunderland, had only two flights a day and the morning flight had already left. S.B.T.C. was particularly disappointed because we had a Guest Book which we had intended to present to the ship for use on it's voyages around the world. Iluang seened rather pleased that we had prepared a present, and suggested we should send it to the Captain, c/o the Agents, Hessrs. Lambert Bros. at Sunderland, as the ship was not due to leave for some days yet. I said we had a second book which we intended to present to her sister ship, the Jinsia, hoped it would be possible for me to attend the launching in order to make a formal presentation.

Huang said the launching was due on March 14th. He had just heard that the prelaunching stage was proceeding according to schedule and for his part he was quite happy that I should be present. Howover, I should have to make ry own arrangements with Doxfords, since the shipbuilders traditionally are the hosts at a launching. I promised to make the arrangements and felt fairly confident that Doxfords would agree to my presence, if only to make good the faux pas they had committed over the Dunkmang.

Huang said that they had recently received a small payment from USO Sewing Machines Ltd,, in respect of the debt owed to the Chinese Corporation. This may have been due to our efforts on his behalf following his complaint to us in January. However, the payment was very small and of an original debt of £9,200, £7,770 was still outstanding:. would be grateful for anything we could do to bring about a satisfactory agreement with the company to pay this debt He asked me what in suitable amounts at agreed intervals. was the normal proceedure in British Courts in cases where debts of this nature were left unpaid. I told him I believed a court would first convince itself of the facts leading to the indebtedness and would then hear evidence about the company's ability to pay, after which it would issuo a judgement, possibly stipulating the payment of agreed amounts at suitable intervals. We both agreed that there was always a risk of a small company running into difficulties, this case largly due to increased competition frou sales of imported Japanese nachines, leading to a reduction in sales and so to inability to pay the manufacturer. We agreed also that this was not a large su: and that by far the best solution would be to persuade the company to pay it off as quickly as possible. Huang was relying on us to use our influence to bring this about.

Huang said that during a recent visit to the oard of Trade Ir. hclavish lud raised sore problems connected with the visit

r. Keswick of r. Jay of Vickers-Zimmer Ltd., to China.

He wished me to also had spoken to him about the matter. tell them that r. Jay had received his visa to travel to China for discussions, and he should be in a position to obtain answers to his questions. He had not waited very long for an entry visa and Huang was rather surprised that he should have become anxious.

I said we had received approaches from three organizations vho wished to invite him and his colleagues to visit certain enterprises, they wore: a proposal that he should rake a Lour of Research Institutes and faris, livestock breeders and manufacturers of agricultural equipment.

The second proposal was for a short tour of Northern Ireland, and thirdly a well known manufacturer of electronics equipment in Lancashire would shortly invite then to visit his factory. Was he generally agreeable to making further tours with no possibly one in arch leaving the agricultural and orthern Ireland tours for May or June, after my return from China? He was interested but would like to have more specific details of what was envisaged. I promised that he whould have these, together with formal invitations in the near future.

Kuang referred to a letter from Rose-Torris Ltd., copied to S.D.T.C. in which reference vas unde to a resolution said to have been passed at a meeting of Education Officers recently. The purpose of the resolution according to that company, would be to prohibit use in schools of musical instruments of Chinese

anufacture. He asked us to try to ascertain through Rose-

Corris or otherwise, the full text of the resolution if it

3 -

existed. l'e hoped we would use our connections to resist any such proposal if made, since discriminatory measures of this sort could have an adverse effect on Eino-"ritish Trade, Trade at present was on the increase, I probably would have heard that many companies were receiving orders and enquiries,- and there were hopes that 1967 could be a good year for trade. However, any additional mensures having the effect of limiting anı established market such as China was winnning for musical instruments could have grave effects on prospects for future trade. I agreed to find out the true position.

I asked Huang if there were signs that Chinese Trade Missions would resume their visits to Britain in the foreseeable future. He had no news of any important mission planned for the next two months, but pointed out that Chinese Missions to Europe in recent times, were usually sent around the middle of the year, and his personal opinion was that this pattern would be adhered to. I welcomed this news, and wondered if it was inappropriate that we should also consider the possibility of organising a mission or missions to go from this country. asked me which particular sectors of industry I had in mind, I was forced to say that we had no concrete plans but it would see that China might be interested to receive companies representing the plastics industry for example, the machine tools and transport industries. He seemed mildly interested and said that he would of course pass on any concrete proposals to the appropriate organisation in China, and they no doubt would accept or refuse a proposed visit in the light of China's requirozonts and planing needs.

I passed him an invitation to lunch informally with oran Webb and Lyself on arch 14th. Miere was no need to give

Le a reply right away and I should in any case sond hit a written invitation within the next day or so,

Kuang recalled that I had said in the past that I welcomed all the work they cared to give ne in promoting Sino-British: trade.

He could think of three particular fields in which I should use my utmost efforts One was embargoes, secondly Quota s

3 and thirdly the British Press, which continued to vilify the Chinese Leaders and current political campaigns in China. I pointed out onco again that the press in "ritain is a law tuito itself and short of writing as much each day as appeared from the pens of those pressen, one would be hard put to it to achieve a suitable offect in support of a different view point. To wore of course continuing to speak to audiences all over the country, indeed, I addressed the pupils at a High School in Laida Vale only yosterday. This possibly in the long rum provided the best method for increasing peoples' background) knowledge and understanding of conditions in the nov China,

Kuang had mentioned his meeting with r. Taclavish to discuss Quotes. I drew his attention to a paragraph in the nov Notice to I:porters stating that priority would be Liven to importers seolting licences for import of Chinese goods direct from China. This was a new provision, and could well have

had its origin in the case put forward by Ir. Finner of Import Developments Ltd, who had complained to S...c. that some importers purchasing goods of Chinese origin through Hong Kong; were taking part of the quota from firry like his which had helped to build up the market in Britain for goods of that type. S.D.T.C. had taken up the point with officials of the Board of Trade and the outcome could be seen in this new provision in Notice to Importers, number 1182. Kuang appeared not to have taken note of that particular paragraph:, but my 1:pression is that he will now do so. The meeting lasted forty minutes.

E. Bolland, Esq. Foreign Office.

سلنا

RECEIVED INth the Compliments

ARCHIVES No.31

- MAR 1967

FCG

A.K. ROGORA

FCG/BOARD OF TRADE

7. Jan.

بار

ندارو مرا

DMM

Comp/29

CRE.1606/#

BY DIPLOMATIC AIR BAG

CONFIDENTIAL

BOARD OF TRIDE, 1, Victoria Street, London, 8. W. 1.

3rd March, 1967.

As Bruce MacTavish has unexpectedly been caught up in some- thing else be has asked me to write about our meeting with Huang fan-chun on 21st February when we asked him to call for a dis- cussion about our import quota arrangements for 1967.

2. The attached note of the meeting follows pretty closely what was said but it does, nevertheless, require slight amplification. The line we took was what so far as we were concerned we regarded our trading relationship as quite normal, i,e. we were not allowing internal events in China to influence the attitude we attached to trade and we expected the relationship we had built up to contime. In fact the cultural revolution was not mentioned at all by either side and we were at pains to impress on Huang (and for him to ud- vise his authorities in Peking) that we hoped to see a steady and progressive increase in trade in both directions.

3. Huang was reasonably responsiye and the meeting was a great improvement on that with Mr./Meng-kau last year when you will recall he wouldn't put a finger on the quota lists let alone take them away.

We think we successfully got orar that so far as We were concerned business was as usuaĪ and I think he accepted this.

4. Pollowing the main reason for the meeting MacTavish asked Haang to do what he could about the visa for Jay of Vickers- Zinner. It looks as if this may have had some affect, Huang was very anxious to assure us that things were moving on this and we have just heard via Peter Marshall who saw Huang on 1st March), that Jay's visa has now been granted. This is encouraging because it did begin to look as if internal difficulties might have prevented a visit for some while.

5. I am enclosing with this letter two copies of the general X.T.1.(1182) and also that relating to textiles. You will see from the general commodity list that we have made a raimber of improvements and for your easy guidance these are as follows:-

Goode transferred to Annex ▲ for which liesnges zill be famed

on appliesfion to the fall Tale ftanstedı-

Artificial flowers, fruit and foliage Glassware (table)

Leather (mbject to type)

Soups (powdered or canned)

Wine

Pig offal not for human consumption (subject to the in-

portation of carcases and animal products order (1954)

T. Peters, Esq.,

British Muhasay,

PIKING.

/ Goods

CONFIÐ FRTIAL

Goods sibisat to mota

Fruit: The canned apple quota increased to £8.000 but

within an overall quota of £100,000.

Pigmeat: Canned pigseat, including han, increased to

£330.000.

Vega- A new quota for dried vegetables 210.000. tables:

Bilk:

1. Apparel quota increased to £110,000 (and

excluding squares, soarves and headgear).

Á new arrangement whereby squares and scarves to a value of £5,000 will be licensed within the £20,000 quota för silk samufacturers.

Chemicals, Cutlery,

Playing carda,

Musical instrument e

Pottery,

Beving machines,

increased to $500,000

£27,500 2132,000

£33,000

* £170,500 (£90,000 for

ornamental)

Toys and games,

Vacuum flaska,

£50,000

* £275,000

231,500

Let me know if you want further copies of the Notices.

I am sending a copy of this letter and enclosures to Bolland at the Foreign Office.

Hi the

(A. K. Rogora)

Present:

Luports fra Chanu 1967

tote of a mesting

Kr. B. Kac"avish

Mr. A.K. Rogora

Kr. Huang Ten-chun

Kr. Li fen-Dun

Board of Trade

Chinese Commercial ittache

Interpreter

Kr. Huang Wen-chun called at the Board of Trade on Tuesday, 21st February, 1967, at the request of kr. Kaoïevish, The purpose of the meeting was to give .r. Huang vivance notification of the quotas set for imports of Chinese goodia in 1967.

thanad kr. Huang for coming and said that the Board of Prade vid sit continue the practice of giving the Chinese authorities Indvance details of the arrangements for imports into the United Kingdom of

trose Chinese commodities su.ject t licensing control. Mr. MacTavish than ran through the st of goods and indicated the main changes which had been cađe and which afforded the Chinese Trading Corporations opportunities for increasing their trade with the l'nited Kingdom.

3. Mr. Huang said that China had always been opposed t. the quota systea operated by the British Governannt ast constituted a hindrance to the natural development of Sino-British trade. He continued in this voin at some length and expressed the hope that the British Government would

it tnim steps to change the method. He also alleged that Chine act no limitations on British exports to China but that British firms were unable to buy all they wanted from China and were also prevented from selling certain gop :3.

L. Mr. KacTavish thanked Mr. Huang for explaining again the Chinese attitude and amid that he would ensure that his remarks were made known to his Authorities. He thought it unnecessary to have a long discussion on our differing views which were already well known both in London and in Peking. He accepted that we were nut at the point to which the Chinese would like us to go in our trading relations, but we were nevertheleas travelling in the right direction and had made considerable progress last year and again this year. He hoped to maintain this progress. The United Kingdon was no

longer the main exporter to China song the ovuntries of estern Europe, and both jest German and French exports in 1966 were higher than ours. At the same time the United Kingdom reained China's biggest importer in

estern Europe. He hoped that we would rega.n our position as the biggest "est European exporter to China and that we would also auntinue to be the principal importer of Chinese goods. There were many opportunities to be grasped, to our mutual advantage. Trade had increased in both directiona

He asked that what in 1966 and we hoped to see a further rise in 1967.

he hid said in this oanneation should be brought to the attention of the authorities in Peking.

Kr. Huang agreed that there had been an increase in Sino-British trade in 1966 and said that the increase in China's importa resulted from the further development of the Chinese national economy and also "the response to the call of Chairman Mao Tse-tung of grasping revolution and stimulating production". He then repeated China'a objcations to Pritish artificial barriers to trade, etc.

16.

TIAL

6. Fr. Huang spoke in Chinese throughout and it was obvious that he was under instructions to play to usual gramophone record about barriers to trade, sto. He did so however in a more friendly manner than Kr. Li Veng-nou, thanked Nr. MacTavish for the information and accepted the draft lotios to Importers and the separate detaik relating to textiles. He undertook to inform his authorities in eking of the changes and of what Mr. KacTavish had said about H.M.G.'s hopes for increased trade in both directions in 1967.

(A. K. R.gora)

Board of Trade

Commercial Relations and Exports

Department

2nd Karch, 1967

BOARD OF TRADE

IMPORT LICENSING BRANCH

NOTICE TO IMPORTERS NO.1178

Imports from China

1967

Yarns and Fabrics of Cotton or Rayon

Other manufactures of Cotton, Linen and Man-made Fibres

Silk Fabrics

The arrangements set out in Notice to Importers No.1134 for imports from China of the goods specified above will be continued for a further period.

2. The full coverage of these quotas for the year to 31st December 1967 will be as follows:-

Yarns, threads and woven fabrics, wholly or mainly of cotton or rayon, or of mixtures of cotton and rayon, for home consumption:

Loom-state woven fabrics wholly or mainly of cotton or rayon, or of mixtures of cotton or rayon, for processing and subsequent re-export:

Mam factures of cotton, linen and man-made fibres,

other than

Yarns, threads and fabrics;

(b) Stockings, socks and footwear;

coverings;

(d) Lace and lace net, and any article

containing lace or lace net;

Gloves;

handkerchiefs wholly or mainly of cotton;

Embroidered linen handkerchiefs and

(g) Towels wholly or mainly of cotton.

Towels wholly or mainly of cotton:

Not more than £60,600

Handkerchiefs wholly or mainly of cotton, but not containing lace or lace net:

Not more than £24,240

Fabrics wholly or mainly of silk:

Embroidered linen handkerchiefs

£151,500

See

paragraph 4

£222, 200

£650,000

see

paragraph 6

Quotas A, C, D. and E

3. Licences under quotas A, C, D, and E will be issued on application to traders who have held licences issued against the corresponding quota for 1966.

The one- per-cent addition to the quota levels is in line with the decision to raise 1967 corton quotas with all restricted countries by this proportion; however, because of the smallness of the additional amount it will not, in general, be possible to do more than round off some of the existing licences. It is regretted that no provision can be made for newcomers,

NTI 1178/1

Quota B

Licences in respect of cotton and/or rayon fabrics intended for re-export under the Customs Processing Regulations will be issued on application to the full value requested,

Quota F

5. Licences under quota F will be issued on application to traders who have held licences issued against the corresponding quota under the terms of Notice to Importers No. 1134. Such previous licence holders will receive an initial allocation equal to approximately three-quarters of the value of their licence (or licences) for the last period, and may re-apply when orders have been placed for 90% or more of the value of the initial licence.

Applications may also be considered from traders who have not previously participated in this quota and who can establish a direct interest in importing silk fabrics,

Quota G

Licences for embroidered linen handkerchiefs will be issued on application to the full value requested up to a limit of £3,000 for an initial application. Further application may be made when orders have been placed for 90% or more of the value of the initial licence.

Applications for licences (separately for each quota) should be made on form ILB/A and be sent to the Board of Trade, Import Licensing Branch, 1, Victoria Street, London, S.W.1. Page 1 of the application form should be completed and page 2 left blank; on page 3 and copies, the applicant's name, full postal address and the country of origin and consignment (China) should be inserted.

A further Notice, on the subject of other imports from China in 1967, will be issued very shortly.

Board of Trade, Import Licensing Branch, 1, Victoria Street, London, S.W.1.

(ILB. 573/G)

17th February, 1967

NTI 1178/2

BOARD OF TRADE

IMPORT LICENSING BRANCH

NOTICE TO IMPORTERS NO.1182

Imports from China 1967

Notice to Importers No.1163 gave preliminary information about the licensing arrangements for imports from China in 1967. Annex B to the present Notice lists all quotas so far established for the current year, excluding only those for certain cotton, linen and man-made fibre manufactures and silk fabrics which were covered by Notice No.1178.

2. There have been various increases over 1966 and a number of additions to the list of goods in Annex A, for which licences will be granted to the full value requested. Open Individual Licences will continue to be issued for eggs and egg products.

3. Applications for licences in respect of quota items will be considered on the basis of evidence of firm offers by the Chinese Export Corporations and subsequent acceptance by the applicant. Licences will not be issued in excess of quotas and as some of these are already approaching exhaustion. (particularly those marked with an asterisk), applicants are advised to ascertain whether a proportion of the quota can be reserved on their behalf before concluding contracts. Reservations will only be considered on the

basis of firm offers.

Where

Priority will be given to traders importing direct from China. quotas are under pressure, licences or reservations relating to imports from Hong Kong or other third country can be considered only where the same evidence of firm offers, etc., from Chinese Export Corporations has been provided.

5. It should be noted that agricultural and food imports continue to be subject to the appropriate animal, public or plant health requirements (and qualitative restrictions in the case of seeds). Importers of pigmeat are advised to quote the name of the establishment from whom they propose to buy. A list of currently approved establishments can be furnished by the Import Licensing Branch if wanted.

Board of Trade,

Import Licensing Branch,

1, Victoria Street,

London, S.W.1.

ILB. 244/G

2nd March, 1967

NTI/1182/1

ANNEX A

GOODS FOR WHICH LICENCES WILL BE ISSUED ON APPLICATION

TO THE FULL VALUE REQUESTED

Apricot kernels and apricot flour (i.e., powdered flesh of the fruit). Artificial flowers, fruit and foliage.

Basketware (other than of cane, wicker or willow) and manufactures of

raffia and straw (including footwear entirely of raffia, straw,

rope or tvine.

Brushes of all kinds.

Buttons.

Cameras.

Carpets, hand knotted.

Chinese food specialists not elsewhere specified, including:

Bamboo shoots;

Chilli sauce;

Fried rice;

Gourmet powder;

Oyster sauce;

Noodles;

Rice sticks;

Soup powder;

Soya sauce;

Spiced bran dough;

Water chestnuts.

Embroidered linen handkerchiefs.

* Fancy goods, not being pottery, silk manufactures or toys.

Fruit; canned, bottled, frozen or dried, other than apples, cherries,

currants, gooseberries, grapefruit, loganberries, pears, plums, raspberries and strawberries.

Fruit juices, other than these derived from apples, blackcurrants,

grapefruit, oranges or pears.

Furniture.

Ginger, preserved.

Glassware, table.

* Hand tools.

Hardware (nuts, bolts, padlocks, etc.) but excluding steel woodscrews. Honey.

* Ivory manufactures and lacquerware not elsewhere specified.

Jewellery, including imitation jewellery.

* Leather (subject to type).

Leather goods, other than footwear and gloves.

Menthol crystals.

Millet.

Mirrors.

* Motor accessories, including sparking plugs.

Nuts in shell or shelled.

Pharmaceuticals.

Pig offal not for human consumption (subject to the Importation of

Carcases and Animal Products Order, 1954).

Prawns, frozen.

Rabbit, frozen and dead rabbits and rabbit meat.

Sea grass manufactures.

Scientific instruments.

Soups, powdered and canned.

Sports goods, other than cotton tents.

Stationery, other than pencils and crayons.

Tomatoes, canned or bottled.

Vegetables dried, canned or frozen, other than those mentioned in Annex B. Tyres and tubes.

Vine.

Woodware, domestic.

* Precise description of goods should be given on application form.

NTI/1182/2

讯

QUOTAS FOR IMPORTS FROM CHINA DURING 1967

(Excluding textile manufactures covered by Notice to Importers No.1178)

ANNEX B

FOOD

Butter

Fish and shellfish:

(a) Packed in airtight containers

E'000

100 (see note

below)

(b) Other fish and shellfish, excluding frozen fish

Note: frozen prawns are on Annex A.

Fruit, the following:- apples, cherries, gooseberries,

logarberries, pears and plums:

(a) Canned or bottled, of which not more than £8,000

for apples and *£5,000 for plums

(b) Dried

100

(170 tons)

Fruit juices derived from apples, blackcurrants or pears

25 (£1000)

Meat and meat products, frozen or in airtight containers,

the following:

Poultry

* Canned pigmeat, including ham

150

330

Fully cooked pigs' liver and lungs for human consumption

Canned meat other than pigmeat

Milk processed, canned or dried

Vegetables, the following:- asparagus, green beans, beetroot,

broccoli or cauliflower, Brussels sprouts, carrots, celery, cucumber (other than gherkins), herbs, lettuce and endive, mushrooms, onions (dry bulb) and shallots, green peas, radishes, rhubarb, spinach and turnips:

(a) Canned or bottled

(b) Dried, (excluding herbs dried in bulk)

TEXTILES AND APPAREL

(200 tons)

25.25 ('000)

Cotton bath mats

Footwear (other than entirely of raffia, straw, twine or

rope)

110

Gloves of all kinds

150

Headgear (including hat bodies, hoods and shapes) not

made wholly or partly of wool or felt

655

NTI/1182/3

Silk apparel, other than gloves, stockings, socks, squares,

scarves and headgear

Silk manufactures, including squares and scarves for which not more than £5,000, but excluding other apparel, yarns and fabrics

Silk yarns (of which not more than £10,000 for thrown yarns)

Woollen knitwear other than gloves, stockings and socks

Woollen fabrics

OTHER COMMODITIES

Basketware of cans, wicker or willow

Chemicals (subject to type)

£'000

110

500

Clocks (of which not more than £20,000 for mechanical

alarm clocks)

Cutlery

27.5

Enamelware

Hurricane lamps

Musical instruments (subject to type)

132

Pencils and crayons

Playing cards

Pottery (of which not more than £90,000 for ornamental

pottery)

Sewing machines

Steel woodscrews

Toys and games, other than playing cards

Vacum flasks

Watches

Note. The quota year for butter runs from 1st April 1967

to 31st March 1968.

Quota exhausted or nearly exhausted.

170.5

100

275

31.5

NTI/1182/4

D.J. Moss, Esq., Far Eastern Dept. Foreign Office.

Porto.

Comp/29

BOAR

With the Compliments

A.K. Rogora

BOARD OF TRADE

E.R.D. Wim 8/3

I. E. win

2. f.a.

Another airing of the well-

known Chinese objections to any form of

quota

system.

Dome 37 is

诺

ports fr Cair 1967

■

içte of a meeting

RECEIVED IN ARCHIVES No.31

- 6 MAR 1967

Fe6/1.

Present:

Er. 3. HacTavish

Fr. A.A. Rogera

Mr. Huang "en-chun

Fr. Li nen-chun

Board of Tride

Chinese Commercial .ttache

Interpreter

Kr. Huang Wen-chun called at the Gourd of Trade in Tuesday, 21st Februar, 1967, at the request of Mr. Kaclewith. The purpose of the meeting was to give .r. Huang -dvance notification of the quotas set for importa China gis in 1967.

2. Dr. MactaVÍS. thanked kr. Huang for coming and said that the Board of Trade wad, ut continue the praction of giving the Chinese authorities "dvance jetaila of the arrangements for imports into the United nudom of those Chim, se commodities au.ject t licensing control. Mr. MacTavish thon ran through the at of goo a and indicated the asin changes which had buên cate and which afforded the Chinese Trading Corporat ns opportunities fur increasing their trade with the United Kingdom.

3. Xr. Huang said that Chine had always been opposed t. the quɔta system

p rated by the British Government as it constitute? a hindrance to the natural development of Sino-Pritish trade. is ccntinued in this vein it soms length and expressed the hope that the Tritish Govern nt would to steps to change the method. He also alleged that Chine s:t no limitations on British exports to China but that Pritish firms were unable to buy all they wanted from China and were also prevented from selling certain red-3.

4. Kr. KacTavish

thanked Mr. Huang for explaining again the Chinese attitude arul amid that he would ensure that his remarks were unde known to his nuthorities. He thought it unnecessary to have a long discussion on our differing views which were already well knwn both in London and in Peking. He accepted that we were not at the pint to which the Chinese would like us to go in our trading relations, but we were nevertheless travelling in the right direction and had made consirable progress last year and again this year.

he hoped to maintain this progress. The "nited Kingdom was no longer the sain exporter to China mong the countries of estern Europe, and both est German and Prench exports in 1966 were higher than ours. it the same time the United Kingdom reained China's biggost importer in

astem durope. He hoped that we would regain our position as the biggest ast Buropean exporter to Chins and that he would also ountinue to be the principal importer of Chinese goons, There were may opportunities to be grasped to our mutual

Trade had increased in both directions in 1966 and we hoped to see a further rise in 1567. He asked that what he hid said in this connection should be brought to the attention of the authorities in leking.

dvantage.

5. Kr. Huang agreed that there had been an increase in Sino-British trade in 1966 and said that the increase in China's imports resulted from the further development of the Chinese national economy and also "t'a response to the call of Chairman Mao Tse-tung of "rasping revolution and stimulating production". He then repeated China's objctions to british artificial barriers to trade, ato.

/6.

6. Kr. Huang spoke in Chinese throughout and it was obvious that he was under instructions to play te usual gramophone record about barriers to trade, etc. He did so however in a more friendly manner than Kr. Li Meng-nou, thanked Mr. MacTorish for the information and accepted the draft botics to Importers and the seperate detail relating to textiles. He undertook to inform his authorities in .eking of the changes and of what Mr. 'MacTavish had said about H.K.G.'s hopes for increased trade in both directions in 1967.

(A. K. R gora)

Board of Trade

Commercial Helations and Exports

Department

2nd March, 1967

COFFI

ป

KTI

طاب

Noted

Sino-British Trade Council

中央貿易协会

President: Mr. John Keswick C.M.O.

Sponsors: The Association of British Chambers of Commerce

The Federation of British Industries

Our Ref: NFW/FEC

The China Association

The London Chamber of Commerce

21 Tothill Street, London S.W.1 Whitehall 6711

All Members of the Council

1st March, 1967

Dear

fur kioss,

I am sending you herewith a list of the Executive Council as at February 1967.

Yours sincerely

Enter + B.u. on

3 April ( for meril Council meeting).

том зро

3/ü

N.F. Webb Secretary General

Pa.

RECEIVED IN

ARCHIVES No.31

- 3 MAR 1967

FC6/1

Sino - British Trade Council

中英貿易协会

RECEIVED IN ARCHIVES No.31

- 3 MAR 1967

President: Mr. John Keswick cu

FC6/:.

The Association of British Chambers of Commerce

The Confederation of British Industry

The China Association

The London Chamber of Commerce

February 1967

21 Tothill Street, London S.W.I

Whitehall 67||

COMPOSITION OF THE "EXECUTIVE COUNCIL"

President:

Mr. John Keswick, C.M.G.

r. II.F. Bibby,

Director,

Associated Electrical Industries

International Ltd

33 Grosvenor Place,

London S.W.1.

Kr. J.F. Bramley,

Managing Director,

British lotor Corporation

Export Sales Ltd.,

Longbridge,

Birmingham,

Mr.

J. Brereton,

Local Director and Assistant

to l'arketing Director,

Vickers Engineering Group Ltd.,

P.C. Box 177.

'Vickers House'

Millbank Tower,

Millbank,

London S.W.1.

Ir. K.J. Collar, C.8.E.

Chairman of

atheson & Co.Ltd. 3 Lombard Street London E.C.3.

MANsion House 6555

Representing

The London Chamber

of Commerce.

BELæravia 1234

Representing

The Association of

British Chambera

of Commerce.

BIRningham Priory 2101

Representing

The Confederation of British Industry.

TATe Gallery 7777

Mr. Eliot Hodgkin,

Oversean General Manager,

Imperial Chemical Industries Ltd., 'Imperial Chemical House',

#111bank

London S.V.1.

Representing

The China Association

LONdon Wall 1160

Representing

The Confederation of British Industry.

VICtoria 4444

Mr. A.E. Marker, Director,

Arnhold Trading Co.Ltd.

'Creechurch House', Greechurch Lane,

London E.c.3.

Mr. W.H. McNeill, C.B.E. Chairman & Hanaging Director. The Glen Line Ltd.,

16 St. Helens Place, London E.0.3.

Mr. S.C. Seward, 0.3.E. Chairman,

Platt Bros. (Sales) Ltd.,

'Oceanic House',

La Cockspur Street, London S.W.1.

Mr. J.A. Stafford,

Joint Managing Director,

Rank Taylor Hobson Division of the Rank Organisation, P.0. Box 36.

Leicester House,

Lee Circle, Leicester.

1. H.S. Stebbing

Managing Director,

Barrow, lepburn & Gale

(Machinery) Ltd.,

19 Grange Road,

London S.E.1.

Mr. N., Waite,

Export Manager,

British Insulated Callender':

Cables Ltd..

P.0. Box No. 5.

21 Bloomsbury Street, London W.0.1.

Representing

The China Association.

AVenue 1122

Representing

The China Association.

LOYdon Wall 2333

Representing

"The Association of British Chambers of Commerce.

TRAfalgar 4023

Representing

The Confederation

of British Industry.

Leicester 23801

Representing

The London Chamber

of Commerce,

BERmondsey 4525

Representing

The London Chamber

of Commerce.

MUSeum 1600

WORKING COMMITTEE

Mr. E.S. Taylor

(Chairman)

Mr. H., Williamson

Mr. A.S. Gilbert, C.D.E.

Kr. H.H. Bullard

Head of E. European & N.

Asian Department, Confederation of British Industry,

21 Tothill Street, London S.W.1.

(Tel: WHItehall 6711)

Secretary,

The China Association,

'Broad Street House' 54 Old Broad Street, London E.C.2.

(Tel: LONdon Wall 1160)

Assistant Secretary

The Association of British

Chambers of Commerce. 68 Queen Street, London E.C.4.

(Tel CITY 7211)

Head of Overseas Dept., The London Chamber of

Commerce,

69 Cannon Street, London E.c.4. (Tel: CITY 4444)

Secretariat:

r. N.F. Webb

Mr. P.S. Harshal1

Secretary-General

Chinese-Secretary

14. I.

MacTavish

Mr. D.J, Moss

Er. R. Reid-Adam, C.).E.

OBSERVERS

Representing

The Board of Trade.

Representing

The Foreign Office.

Representing

The British National Export Council.

RESTRICTED

D.J. Moss, Esq. Far Eastern Department.

With the compliments of

COMMERCIAL SECTION

(A.J. Hunter)

THE OFFICE OF

THE BRITISH CHARGÉ D'AFFAIRES

PEKING

21 February, 1967

Enter and

Дом зай

(1121/67)

RESTRICTED

office of the British

Charge d'Affaires,

PEKING.

21 February, 1967

RECEIVED IN ARCHIVES No.31 |

An article on page 10 of the Financial Times of

14 February sayai-

- 3 MAR 1967

FC6|1

"Two important contracts involving the export of British plant to China are expected to be signed soon. One of the firms involved is ready to send a small mission to Paking to negotiate final details."

2. This is news to us we had indeed been tending to discount the possibility of any further complete plant contracts while the present political situation lasts. The only British firm who we know to be actively interested in a complete plant contract here is Humphreys and Glasgow (for a further fertiliser plant), but although we are half expecting a further visit from them before long we had not heard that this contract was anywhere near completion. Have you any idea what companies this article night be referring to? Or could you possibly find out?

I am copying this letter to Moss in the Foreign Office.

(A. J. Hunter)

First Secretary (Commercial)

A.K. Rogora, Esq.,

Commercial Relations and Exports Department, BOARD OF TRADE.

RESTRICTED

B (2029)

CONFIDENTIAL

Reference

יהו--וייי

Mr. Wilson

Mr. Derson

Mr, Bolland

RECEIVED IN |ARCHIVES No.31

SINO BRITISH TRADE

1 5 FEB 1967

FC6/1

이

I attended a luncheon today given by the Sino British Trade Council in honour of the Chinese Commercial office and Bank of China. Six officials from the Commercial Office led by Mr. Huang Wen-chun attended together with four officals from the Bank of China.

2. We were treated to a long and boring account by Mr. Huang of recent developments in China. He repeated the Party line on the Cultural Revolution and complained in standard terms of the obstacles to Sino-British trade raised by the British Govern- ment, namely, the COCOM embargo and quota restrictions The only new development was that Mr. Huang com- plained bitterly that the British Government had afforded Mr. Kosygin every possible opportunity to slander China. He added that such unfriendly actions could not fail to affect relations between Britain and China and would also harm the growth of Sino British trade.

3. The only amusing event during the whole luncheon was that Mr. Wu from the Bank of China who by his

dress and manner had already manifested certain bourgeois tendencies, managed to fall asleep during the singing of Chairman Mao's praises. Such obvious indifference was a source of considerable dismay to some of his blue-suited colleagues.

FatalA

денон

(D. J. MOSS)

(FC 6/1)

CONFIDENTIAL

10 February, 1967

Te recently sent Donald Hopson in Paking a copy of our paper on Sino-British trade, together with a copy of de la Kare's letter of 17 January to Mackahon.

2. Hopson has now written to let us know that he agrees generally with the paper, even though he feels that with the way things are going at present, the effect of the Cultural Revolution on the Chinese economy and therefore on trade in 1967 may be rather greater than we anticipated. He feels, however, that our proposals to try to incresse trade are, in general, still valid. He also agrees with the suggestions which de la Bere rode to Keolishon in his letter of 17 January that we should contime with our preliminary preparations so that when the right moment comes we are well prepared to take advantage of it.

an i

3. In the meantime, Hopson stresses that there is no point in one of your officials trying to go to Canton in the spring. He agrees that we should hold over this idea

until the autumn.

1. 1. P. MacTavish, Baq....

Board of Trade,

London, S.7.1.

CONFIL

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(E. Bolland)

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NOTHING TO BE WRITTEN IN THIS MARGIN

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M. B.E.P. MacTavish

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Sino-British Trade Council

中央貿易协会

President: Mr. John Keswick C.M.G,

Sponsors: The Association of British Chambers of Commerce

The Federation of British Industries

Our Ref: NFW/FEC

The China Association

The London Chamber of Commerce

21 Tothill Street, London S.W.1 Whitehall 6711

9th February, 1967

President and Members of the Executive Committee.

Dear

Lunch on Tuesday 14th February.

I am sending you herewith a list of those attending the lunch next Tuesday. Would you kindly wear your badges if you have them.

RECEIVED IN ARCHIVES No.31

1 0 FEB 1967

FC6/1

Yours sincerely,

N.F. Webs Secretary General

Luncheon at the Connaught Rooms, Great Queen Street, London W.C.2.

at 12.45 p.n. on Tuesday, 14th February, 1967

Host Mr. John Keswick, C.M.G. President of the Sino-British Trade Council.

Office of the Commercial

Counsellor of the Peoples' Republic of China.

Mr. Huang Wen-chun, Commercial Secretary.

Mr. Sun Shih-wei, Commercial Section.

M*.

Jen Ju-tai, Commercial Section.

Mr.

Shih Sung-shen, Commercial Section.

Mr. Chen Yuan-shen, Commercial Section.

Hr. Li Wen-chun, Commercial Section

The Bank of China

Mr. Wang Wei-tsai Manager.

Mr. Li Yu-Min, Assistant Manager.

Mr. Wu Kung-chao,

Direct Trade Promotion Division.

Mr. Joe Wu-Fu,

Direct Inward Bills Division.

Mr. H.F. Bibby

Mr. J. Brereton

Mr.

Sino-British Trade Council

H.J. Collar, C.D.E.

Mr. A.S. Gilbert, C.B.E.

Mr. 1..3. Grant

ir. D. FacTavish

Secretariat

Mr. H.F. Vebb

I. P.S. Marshall

Mr. A.E. Marker

1. D.J. Nosa

I. R. Reid-Adam, C.B.E.

一

Mr. S.C. Seward, 0.0.E.

Mr. H.S. Stebbing

Mr. E.S. Taylor

Mr. N.V. Waite

r. H.B. Williamson

RECEIVED IN ARCHIVES No.31

- 8 FEB 1967

| FC6||

(1121/67)

CONFIDENTIAL

Office of the British Chargé d'Affaires,

PEKING.

30 January, 1967.

Mr Bolland.

Ponti

사업성

7/2

Dear

Archur,

Many thanks for your letter FC 6/1 of 17 Jamary enclosing a copy of a paper on trade with China.

2. We agree generally with the paper although with

mm. the way things are going at present, the effect of the

том

Cultural Revolution on the Chinese economy and therefore on trade in 1967 may be rather greater than we anticipated. Your recommendations, however, are in our view still

Me mu se 9/il valid. I also agree with the suggestions made in your

again

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letter to MacMahon that we should nevertheless go on making our preparations so that when the right moment comes we are well prepared to take advantage of it. Meanwhile there is clearly no point in anyone in the Board of Trade trying to come to Canton in the Spring. let us, as you suggest, hold this idea over until the Autumn.

1/2 * 3.

Incidentally we do not yet seem to have received a copy of the record of John Keswick's call on the Secretary of State, though I have had a letter from John himself which mentions it.

P.S.

We have now

yours

Donald

(D. C. Hopson)

found the record

A. J. de la Mare, Esq., C.M.G.,

Foreign Office.

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RECEIVED N

ARCHIVES No. 10

19 JAN 1967

ted

Matheson & Co., Limited

3 Lombard Street,

London,

EGS

BERD. 19% M/!

IM&Co

JARDINE, MATHESON & COMPANY LIMITED

CHINA TRADE BULLETIN NO. 59

CONFIDENTIAL

1. POLITICAL

During the last six months in China all policy and planning has been subordinate to "The Great Proletarian Cultural Revolution", the principal aim of which is "to utterly destroy bourgeois idealogy and vigorously establish the supremacy of Mao Tse-tung's thought".

Marshal Lin Pizo, the "close comrade-in-arms" of Chairman Mao Tse-tung, is now Chairman Mao's chief deputy and indicated successor. While the purpose of this bulletin is to comment on trade and not on politics, the over-riding factors in China Trade today tend to be political. In the modern Chinese view, trade and politics are indivisible and politics must be placed in the forefront. The same ruling applies to literature, art and education.

In June all schools, universities and colleges were closed for six months, pending complete reform of the educational system. Details of the new educational system have not yet been announced, but the guiding principles are:-

(a) the period of schooling is to be shortened. Marshal Chen Yi, the Chinese Foreign Minister was recently quoted as saying that the curriculum in universities is to be reduced to four years, so that the graduates can make themselves useful members of society at an earlier age.

(b) theoretical study in the classroom is to be combined with periods of productive

labour in factories or on the land.

While the original announcement of the closure of schools and colleges indicated a six months break in education, there have been recent announcements that the schools will not reopen until the summer.

By the closure of the schools and universities, the leaders of the Cultural Revolution acquired a shock force of students, popularly known as the "Red Guards", with which to implement the revolution. Eight massive rallies were held in Peking during the summer and autumn. Including those marching in procession on the National Day on October 1st, a total of 11 million revolutionary students, teachers and Red Guards were personally reviewed by Chairman Mao. The onset of cold weather in Peking has now necessitated the suspension of rallies in the capital until the Spring. Meanwhile a campaign of criticism continues against certain senior officials who are accused of being "anti-revolutionary."

Two other important events must be recorded during the period covered by this bulletin. On the 8th August, the Central Committee of the Chinese Communist Party adopted a 16 point Decision, codifying the previous directives on the Cultural Revolution. This was the most important policy document made public in China during 1966.

Later, to quote the official communique: "On October 27, 1966, China successfully conducted over her own territory a guided missile nuclear test. The guided missile flew soundly, the nuclear head precisely hit the target in the scheduled distance and the nuclear explosion was realised. This is a great victory of Chairman Mao Tse-tung's thought and a brilliant result of The Great Proletarian Cultural Revolution". A fifth nuclear test was conducted on the 28th December.

Jardine, Matheson & Company Limited

ECONOMIC

China Trade Bulletin No. 59

1966 has been the first year of the Third Five Year Plan and while there have been recent references to successful progress in implementation of the Plan, with factories surpassing their quotas for 1966, no details of the actual Plan itself have been released.

From an analysis of press reports however it is clear that agriculture remains the founda- tion of the economy, with industry as "the leading factor".

Agriculture-Despite drought in some areas, harvests in 1966 were generally satisfactory, with good rice harvests being reported from East and South China. There were substantial tonnages of rice available for export during the second half of 1966. A Hsinhua release during the last week of December claimed that the grain harvest had been the best for 17

years.

The main task of industry continued to be to "give vigorous support by turning out more products suited to the needs of the countryside". In October, the official "Peking Review" stated that China's output of chemical fertilizer in the first nine months of 1966 was 37 per cent higher than in the same period of 1965. It was claimed that the quality of nitro- genuous fertilizer was maintained while that of phosphatic fertilizer went up.

However China's own production of chemical fertilizer is still falling a long way short of the countryside's increasing needs and in November, China contracted to buy more than 3 million tons (in terms of Ammonium Sulphate) for delivery in 1967 from West European manufacturers. Negotiations continue with Japanese producers, who are expected to succeed in selling 1 to 2 million tons in 1967.

Industry-The emphasis has been on "Self Reliance". There have been many claims of technical advance, increased production and successful overcoming of obstacles due to intensive study of Chairman Mao Tse-tung's works. Among the technical advances claimed have been the synthesis of benzene, a new fermentation de-waxing process in oil refining and a new automatic oxygen top blown converter for the steel industry.

The Chinese steel industry received considerable publicity in the autumn, with frequent references to increased production and improved products. China's new modern oilfield, Taching, was also much in the political spotlight during the year, being held up as the example for other state enterprises to emulate.

China now appears to be nearing self-sufficiency in crude oil. The major bottleneck remains refining capacity.

3. FOREIGN TRADE

In the absence of official Chinese trade statistics it is difficult to get the full picture of China's total foreign trade. However from a study of the official trade statistics of certain countries trading with China, a reasonably accurate assessment can be made. From such a basis it is possible to see that China's foreign trade improved significantly in 1965, with imports up nearly 20% and exports up about 15%. It is still too early to make a close estimate for 1966, but the indications are:-

(a) a continued reduction in trade with Socialist States,

(b) increased imports from capitalist countries, but with a slower growth rate than

1965,

Repayment of the debt to Russia in early 1965 facilitated a realignment of trade. While the increase in exports does not seem to be matching the increase in grain purchases, China has sufficient foreign exchange for immediate purposes.

During 1966, exhibitions were held in China by organisations from Great Britain, Belgium, France, Sweden, Poland, Hungary and East Germany.

Jardine, Matheson & Company Limited

China Trade Bulletin No. 59

Exhibitions in China in 1967 are planned by Denmark, Sweden, Switzerland, Italy and Japan.

For their part the Chinese held exhibitions during 1966 in Japan, Hong Kong, France, Rumania, Hungary and East Germany.

4. RUSSIA

Chinese foodstuff and textile exports to the U.S.S.R. continued to drop during 1966 as did Soviet deliveries to China of petroleum products. Soviet exports had rallied during 1965 and while Soviet overall trade with China during that year was three times that of British trade with China, the ratio for 1966 is expected to be substantially less when the final Soviet figures for the current year are available.

Machinery, rolled steel products and sawn timber continue to be the main articles imported from Russia. The Soviet-Chinese Commission on Scientific and Technical Cooperation signed a protocol in November for technical cooperation during 1967. Despite idealogical differences, Russia continues as one of China's major trading partners.

5. JAPAN

Expulsion of pro-Peking elements from the Japanese Communist Party has led to the three principal Japanese "friendly firms" falling from grace in Peking.

nlay

Japanese trade with China amounted to £204 million during the first eleven months of 1966, compared to £169 million during the year 1965. The total of two-way trade exceed £215 million by the end of 1966. The most interesting individual sale by Japan was an iron ore pelletising plant for China, to be built by Hitachi.

Japan and China have no formal diplomatic or trade relations and Sino-Japanese trade conducted under a memorandum known as the Liao-Takasaki agreement. 1967 will be the fifth and final year of the current L-T agreement and it is within the framework of this agree- ment that contracts for basic commodities, such as fertilizer, are concluded.

The memorandum for L-T trading for 1967 was signed in Peking in November, after lengthy negotiations on the rice barter issue. China requested Japan to import 300,000 tons of Chinese rice during 1967, while Japan (having had an unprecedentedly favourable rice crop) only wished to import 180,000 tons during the coming year. Compromise was eventually reached on a figure of 200,000 tons of rice for 1967.

Full particulars of the memorandum for 1967 have not yet been released but some of the details that have been reported are:--

(a) Japan is to buy 700,000 tons coking coal, 50,000 tons iron ore, 50,000 tons pig iron

and 1,000,000 tons of industrial salt.

(6) China is to buy during 1967;-

37,300 tons medium steel sheets

13,000 10,000

hot-rolled thin sheets

16,000

cold-rolled sheets galvanised sheets

8,000 tin plates

84,300 tons steel products

As already mentioned, the 1967 fertilizer contract is still being negotiated.

Jardine, Matheson & Company Limited

GREAT BRITAIN

China Trade Bulletin No. 59

Figures so far available for Sino-British trade during 1966 are:-

1966

1965

1964

(Jan./Sept.) (12 months) (12 months)

Exports to China (Millions)

Imports from China (Millions)

£21.9

£26.2

£24.9 £29.7

£17.7

£24.6

While British shipments to China have increased, there is little evidence to show that new business is being concluded at a sufficient rate to provide shipments at a higher level in 1967.

The second half of 1966 saw the commissioning at Luchow in West Chins of the ammonia synthesis plant built by Humphreys & Glasgow, the delivery of the first 15,000 ton cargo vessel built for China at Sunderland and a large British exhibition in Tientsin, organised by the Scientific Instrument Manufacturers Association. This exhibition was a follow-up to the small but very successful British Scientific Instruments Exhibition held in Peking in 1964.

It was a matter of sheer bad fuck that the timing of the exhibition in September coincided with the high-tide of the Cultural Revolution in Tientsin. While there was good attendance from electronic factories in the Tientsin area, the exhibition was in effect a local one, without the nation-wide attendance accorded to the I.C.1. Exhibition in Tientsin in September 1965. The higher academic and research professors from Peking, Shanghai and other centres were not given leave to attend and perhaps 50% of the impact of the exhibition was lost. However, as with all such exhibitions, the success can only be judged by the orders received during the next twelve months. Some encouraging orders have already come in.

Of all the European manufacturers, Great Britain has been the most successful in the sale of chemical plants to China. Imperial Smelting Processes sold "know-how" on zinc smelting in 1966 and erection is now in progress at Lanchow in North West China of chemical plants supplied by Vickers-Zimmer and Simon-Carves. British firms continue to be com- petitive in the sale to China of steel and machine tools.

To sum up the current prospects for expansion of British sales to China:-

(a) any sizeable expansion is dependent on an improvement in political relations between

Great Britain and China, which at present can only be described as cool,

(b) the Chinese market for imports of foreign machinery is a small one by world

standards and the prospects for rapid expansion are not good,

(<) competition for a share in any future expansion will be fierce.

7. WEST GERMANY

West German exports to China continue to increase at a rapid rate. Shipments for the first nine months of 1966 were £32.2 million, compared to the United Kingdom's £21.9 million for the same period.

Earlier in the year, the sale of a large steel complex to China was being negotiated by a consortium of Weat German firms headed by Demag. Despite a guarantee of credit from the West German Government, the sale of the steel complex did not materialize. Neither did Mannesmann succeed in selling a steel pipe plant. However Schloemann sold two rolling mills and German merchants are showing great activity in selling a wide variety of products to China such as chemicals, steel and machine tools. After the Overseas Chinese and the Japanese, the largest contingent at the Autumn Canton Fair came from West Germany.

Jardine, Matheson & Company Limited

FRANCE

China Trade Bulletin No. 59

French efforts to set up close cooperation with China, following the establishment of diplomatic relations in 1964, have begun to bear fruit. Air France opened a weekly air service from Paris to Shanghai in September 1966. In December the French motor manufacturing firm of Berliet announced the further sale of 600 heavy duty lorries. This followed the sale last year of 1035 Berliet vehicles, mainly dump trucks.

A consortium of French electrical firms were also reported as having submitted a tender for a large power station. However at the time of writing it is understood that no French firms have succeeded in selling a complete plant to China in 1966. There is no news of the vehicle manufacturing plant sold by Berliet in 1965, other than that the contract is in course of being implemented.

9. HOLLAND

Following the unexplained death of a Chinese engineer in The Hague in July and the expulsion of the Chinese Charge d'Affaires, diplomatic relations between China and Holland have been severely strained. Retaliatory action by the Chinese has so far been restricted to the refusal to accept Dutch material under certain contracts. There is also a ban on the use of Rotterdam as a shipping port under the same contracts. However now that the party of Chinese engineers has has been permitted to leave Holland, an early settlement of the dispute is likely.

10. AUSTRIA

During 1965 the Chinese established a trade mission in Vienna, which was followed by the opening of an Austrian mission in Peking. After many months of negotiations-and premature reports of the conclusion of a contract-it was finally confirmed in November 1966 that Voest had signed a contract to build an L-D (oxygen blast) steelmaking plant at Taiyuan. The contract was stated to be worth more than £5 million.

11. SWEDEN

A plant for the pre-fabrication of housing sections, built in China by the Swedish firm of Siporex, was commissioned during the summer.

Swedish trade to China has increased significantly from small beginnings, with sales of steel and mining machinery, following a successful exhibition in Peking. A large Swedish exhibition is scheduled to be held in Peking in April 1967 and 450 tons of exhibits are already on their way out by sea. However, according to a recent press release from Stockholm, the exhibition may have to be cancelled as an alternative site cannot be found for the exhibition. The original Peking Exhibition Centre is reported to have been requisitioned for use by the Red Guards as a barracks.

12. SPAIN

Negotiations continue for the building in Spain of a number of merchant ships for China on a barter basis, in exchange for Chinese foodstuffs and light industrial products.

13. CANADA

The Canadian Prime Minister, Mr. Lester Pearson, stated in November that Canada would consider steps to give diplomatic recognition to China if efforts to seat her in the United Nations should fail. Meanwhile the Chinese response to a Canadian suggestion that both Taiwan and The People's Republic of China should be seated in the United Nations was that the suggestion constituted "a grave provocation against the Chinese people".

In 1966 Canada harvested the greatest wheat crop in her history (840 million bushels) and Canadian hopes for higher prices have been discounted to some extent by the recent news of record wheat crops around the world.

Jardine, Matheson & Company Limited

China Trade Bulletin No. 59

In December China signed a contract to buy £25 million worth of wheat from Canada under an agreement dating from August 1966, which calls for Chinese purchases of from 168 million to 280 million bushels over a three year period. The latest purchase of 34 million bushels is to be shipped from Pacific coast ports between January and July 1967.

Efforts continue to increase Canadian purchases of Chinese textiles to redress the imbalance of trade.

14. AUSTRALIA AND NEW ZEALAND

Australian Wheat sales to China have continued with a further contract being signed in October, providing for 61 million bushels worth £36 million to be shipped before June 1967, if all the options are fully exercised.

While China has sharply increased her buying of non-ferrous metals in world markets over the past year (perhaps 40,000 tons of copper and 25,000 tons of zinc during 1966), Australia has not shared in such sales due to government policy. Metal sales to China of this nature are considered to be inconsistent with the presence of Australian troops in Vietnam.

Australia and New Zealand have continued to make substantial sales of wool to China and have found a new market in China for their pedigree livestock.

Chinese exports of minerals, textiles, shoes and light industrial products to Australia are helping to balance the trade.

15. CANTON FAIR-AUTUMN 1966

The 20th Canton Fair was held from the 15th October to the 15th November 1966. According to an official Chinese press release after the close, 20 times more business was transacted at the 20th Fair than at the first Fair in 1957. Attendance was reported to have exceeded 6,000 businessmen from 60 countries, compared with 1,000 visitors at the first Fair years ago. While as usual it was stated that the number of contracts and the total turnover bad broken all records, it was perhaps significant that the feature of the Fair given most pro- minence in the Chinese press was that 60,000 copies of the "Quotations from Chairman Mao Tse-tung" had been sold at the book counter.

ten

There is no doubt that the Fair closed in a successful atmosphere, in contrast to the fears expressed in Hong Kong in early September, when many Chinese merchants in the Colony were wondering if the Fair was going to be held at all. Reports of rough handling of Overseas Chinese by the Red Guards had made habitual visitors to Canton reluctant to travel. Preliminary information received in Hong Kong through the China Travel Service, that Chinese staff of foreign firms would not be allowed to stay in the saine hotel as their foreign colleagues, also contributed to the anxiety.

In early October energetic steps were taken by the Canton authorities to reassure Overseas Chinese that they would be welcome in Canton. Some 1,200 Overseas Chinese attended the Opening Cremony, compared to the usual number of 1,500. Throughout the Fair Overseas Chinese came and went freely and Chinese staff of foreign firms had no unusual problems. However Overseas Chinese business activity (as opposed to attendance) appeared to be less than usual.

Speeches at the Opening Ceremony, attending by a total of 2,700 hosts and guests, were made by:-

Tseng Sheng

Yang Hao-Lu

Liao Cheng-chih

-Mayor of Canton

Chairman of the Fair Committee

-Vice Minister of Foreign Trade

-Chairman of Japan-China Friendship Association

Chairman of the Committee for Overseas Chinese Affairs Chairman of the Chinese Committee for Afro-Asian Solidarity

Jardine, Matheson & Company Limited

China Trade Bulletin No. 59

As was to be expected under present circumstances, the speeches were almost wholly concerned with the Cultural Revolution and made only fleeting references to trade.

Liao Cheng-chih was one of the co-authors of the Liao-Takasaki agreement, under which Sino-Japanese trade has been governed for the last four years. On the evening following the Opening Ceremony, Liao was host at a dinner for the large Japanese contingent, numbering 600. By the end of the Fair a total of 750 Japanese merchants from 230 firms had attended the Fair. A press release issued in Tokyo after the Fair stated that Japanese sales contracts with China had amounted to only £23 million, including 16 million worth of steel sold before the Fair in Peking. Japanese purchases from China at the Fair amounted to £21 million.

News of the Chinese guided missile nuclear test reached Canton in the early morning of the 28th October. The Fair was closed that morning for a celebration ceremony and a triumphal procession through the streets. Most of the foreign visitors attended the celebration ceremony in the Fair courtyard, but only a few joined the procession.

'The main features of the Fair from the business point of view were:-

(a) the weak produce market in Europe, where prices did not reach the levels at which the Chinese were prepared to sell. When the Fair closed, substantial stocks of traditional Chinese produce remained unsold. Some large contracts were concluded after the Fair, when the European market had strengthened.

(6) a much improved range of Chinese cotton qualities, which resulted in substantial business, also an improvement in the range of Chinese machinery and instruments offered for export,

for export.

The Closing Ceremony on the 15th November was again political in content, speeches being made by Tseng Sheng and Yang Hao-lu only.

Throughout the Fair, Red Guards were scrupulous in observing their instructions not to interfere with visitors to Canton. On one of the Sunday holidays during the Fair, a social gathering was arranged for visitors to meet the Red Guards and to learn their views at first hand.

North Korea and North Vietnam also held small exhibitions in buildings adjacent to the Chinese Export Commodities Fair.

16. HONG KONG

The Chinese Machinery and Instruments Exhibition in Hong Kong in August and the Chinese Furniture Exhibition in September were well attended and successful.

Imports from China during the first ten months of 1966 amounted to 139 million, compared with 145 million for the full year in 1965, continuing Hong Kong's role as the leading source of foreign currency for China. The Cultural Revolution has so far had no noticeable effect on deliveries of Chinese goods to Hong Kong.

Hong Kong's domestic exports to all countries for the first ten months of the year increased by 144 percent compared with those for the corresponding period in 1965. The pattern of trade remained much the same, with the United States being the Colony's biggest customer, followed by the United Kingdom, West Germany and Japan.

Mr. Frederick Lee, the Secretary of State for the Colonies, paid two visits to Hong Kong during the latter part of the year to discuss local administration and the Colony's financial contribution towards its own defence. Arrangements for the Trade Development Council and the Export Credit Insurance Corporation neared completion.

Jardine, Matheson & Company Limited

China Trade Bulletin No. 59

1966 has not been an easy year for Hong Kong. There were the Kowloon riots in April and a freak rainstorm in June caused 60 deaths, 125 landslides and widespread damage. However the economy-apart from the property market-appears to have recovered from the unsettled conditions of 1965, when the banking troubles slowed up investment and expansion.

17. CONCLUSION

While the Cultural Revolution has tended to inhibit further purchase of complete plants from abroad, Chinese routine imports and exports have continued unaffected. Passenger rail transport has been greatly congested due to the mass movement of Red Guards but there has been no return to the chaos in goods transport which occurred during the Great Leap Forward of 1958. Shipment dates on exports are being met and quality maintained, with rare exceptions.

Opportunities continue for Western business in China in certain specialized fields, However the Chinese market, compared to opportunities elsewhere, is likely to remain restricted and difficult under present circumstances.

HONG KONG: 31st December, 1966.

(1121) RESTRICTED

D.J. oss, Esq.

oss,

Far Eastern Department.

RECEIVED IN

ARCHIVES No.31

- 7 FEB 1967

Feb/1

With the compliments of

COMMERCIAL SECTION

Now

COM

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love copied to

(A.J. Hunter) "Mm Newbury

Enter than

1. ER.DLIN

Defence Innfelly an Staff.

1/2

2. J.R.DOCKY

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4 PASD. (Mt. Frewin)

THE OFFICE OF

ELE 13/3/67.

THE BRITISH CHARGÉ D'AFFAIRES

PEKING

1 February, 1967

BOM 6/1

ja 15/ãã

(1121/67)

RESTRICTED

Office of the British

Charge d'Affaires,

PIXING.

1 February, 1967

Please refer to our exchange of telegrams (EXCED No. 1 in beth directions of 26 and 27 January).

2. We have now received the copy of the Financial Times containing the article which you referred to, and it contains nothing to make us change our earlier opinion that Chinese payments are unlikely to be affected by any developments in the cultural Revolution 80 far.

3. There have been a number of references in the Chinese press and wall posters (including the one mentioned in the Financial Times article) to various disruptions in trade; administrative delays in the trading corporations, delays in availability of produce, and delays in transport arrangements. These have been going on for some months, although I have little doubt that they have grown somewhat worse since the beginning of this year. The experience of British buyers of Chinese products who have been in Peking recently confirms the impression given by the Japanese that Chinese exports are going to be considerably affected by these difficulties during the next few months.

4. There is however no indication yet of any immediate effect on Chinese purchasing from abroad, or on payment for those purchases they have already made. Obviously if the Chinese sell much less this year than in previous years, there is a possibility that they will have less foreign exchange available for imports next year. At the moment however they appear to be signing contracts for purchases from abroad at very much the usual rate although it is true that there have been fewer spectacularly large contracts in recent months. In any case the Chinese are cautious traders, and dislike being in debt to any other nation; so one can be fairly certain that if their foreign exchange coffers start to run dry they will stop buying long before the danger point is reached. Meanwhile, they are likely to continue to be punctilious about paying on the nail.

5. We will of course let you know if subsequent developments cast any doubt on the payments position.

I am copying this letter to Rogora in Commercial Relations and Exports Department and Moss in the Foreign office.

(A. J. Hunter)

First Secretary (Commercial)

M.G. Stephens, Esq.,

Export Credits Guarantee Department,

59-67 Gresham Street,

London, ...0.2.

HESTRICTED

Ph.D. Hoss Sear

F.ED.

RECEIVED IN

With the Compliments

ARCHS No.31

-6 FEB 1967

VERY Y A. K. ROGORA

BOARD OF TRADE

FC6/19

Comp/29

Enter and fa Dom 6/II

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re: CRE 311/66

Your refere

BOARD OF TRADE

Commercial Relations and Exports Department

1 Victoria Street, London S.W.1 Telex: 25955 Answer Back: BOTHQ LONDON

Telegrams: Advantage London S.W.1

Telephone: Abbey 7877, ext. 2747

BY DIPLOMATIC AIR BAG

3rd February, 1967

Since I wrote to you on 17th January about Plesseys, we have had lunch with them in company with John Denson and David Moss from the Foreign Office.

We managed, I think, to allay their immediate fears. and they are going to get in touch with us again later when and if they get a summons from Peking. One thing which is exercising the minds of Plesseys, and particularly the engineers concerned, is when will the summons come. They have asked Techimport to give some indication about timing but not surprisingly none has been forthcoming. If the opportunity should present itself perhaps you could ask Techimport what their intentions are in releation to Plesseys' engineers. In the present state of affairs the answer may well be a lemon.

A. J. Hunter, Esq.,

First Secretary (Commercial), Peking

(A. K. Rogora)

(A.49) RESTRICTED

D.J. Moss, Esq.

Far Eastern DepartmentECEIVED IN

ARCHIVES No.31

- 6 FEB 1967

FCG/1

With the compliments of

COMMERCIAL SECTION

(A.J. Hunte:

nter

Mr.

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Enter than

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THE OFFICE OF

THE BRITISH CHARGÉ D'AFFAIRES

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1 February, 1967

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contacting Plassey's

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(A.49)

RESTRICTED

office of the British

Charge d'Affaires,

PIXING.

1 February, 1967

Thank you for your letter CRE 311/66 of 17 January informing me that about 10 Plessey engineers are likely to be coming to stay in Sian for a period beginning in May or June of this year. Ι must say that, in present political circumstances and after our recent troubles in Lanchow, I view this prospect with mixed feelings. I was told last week by a Jardines representative that some people from Farmer Norton may be coming before long to a site somewhere near Peking, so it looks as though we are going to have plenty of people to look after.

2. It is understandable that Plessey should be worried at the moment about sending people to China. The Vickers-Zimmer and Simon-Carves technicians in Lenchow are finding life restricted and noisy, and are not enjoying having a grandstand view of the Cultural Revolution. But the Foreign Office are quite right to advise you that at the moment we have no reason to believe that foreigners in China would be badly treated. The Chinese are likely to postpone the engineers' visit themselves if they feel that they will not be able to look after them properly, and for the time being Plessey should certainly go ahead with their plans.

3. As a result of our experience with complete plants in Luchow and Lanchow, there are several points which I think it important that you should make to Plessey at this stage. These are AS follows:-

(a) The Chinese will hold Plessey rigidly to the wording of their

contract. Plessey should therefore ensure that there are no ambiguities, and that there are no stipulations in the contract from which they may want to depart, e.g. if the contract specifies that two electrical engineers are to come they will not be allowed to bring three, nor will they be allowed to bring two administrative men instead. If Plessey have doubts about any particular parts of the contract, they should approach the Chinese now about renegotiation.

(b) Particularly in view of the restrictions of life in China

Plessey will almost certainly want to import goods into China for the personal use of their engineers, e.g. food and drink, air conditioners, radios etc. They must ensure in good time that all the arrangements for the import of these goods questions such as whether an import licence is required, payment of or exemption from import duty have been agreed

and

in writing with the Chinese. Though I know we have to be careful about recommending individual firms, I think that Plessey would be well advised to ask the ascistance in making these arrangements of Jardine Matheson, Hong Kong, who have had experience of doing this work both for Simon-Carves and

A.K. Rogora, Esq.,

Commercial Relations & Exports De arment, BOARD OF TRADE.

/Vickers-Zimmer

RT TRICTED

RESTRICTED

Vickers-Zinner and have learnt a great deal therefrom.

important that any personnel who are to live in a comparatively renote part of China for several months or more should be neither nervous nor excitable by nature. Plessey should bear this in mind when selecting the men they send. It is especially important that the Site Manager should be chosen for his reliability, resilience and level-headedness as well as any necessary technical qualifications.

(d) Plessey should inform us in Peking in advance of the movements

of any personnel coming to China. The personnel themselves should report to us in "eking on arrival, and should keep us informed of their addresses and telephone numbers when they are elsewhere in China.

(e) In general, nothing should be left to chance or should be made

dependent on Chinese goodwill or understanding. I am thinking particularly of the need to check the dates on visas which have been issued, and to ensure that both sides understand how long any particular individual is going to stay in China.

I think also that you ought to ask Plessey to keep in the closest possible touch with you (and us) about this project from now on, and to consult us immediately if there are any aspects about which they have doubts. We will of course advise you promptly if there is any change in the situation here which we think may affect their plans.

4. Mr. Phillips of English Electric, who you mentioned in your letter had come to work on the Simon-Carves polyethylene (not fertilisat plant, had a meal with us on his way through on 14 January. He seemed a fairly seasoned campaigner, and just the right sort of person to be going.

I am copying this letter to David Moss in the Foreign office.

(A. J. Hunter) First Secretary (Commercial)

RESTRICTED

中

Recd=24.

RECEIVED IN

ARCHIVES No.31

SB TC

- 2 FEB 1967

FC6/1

Sino-British Trade Council

With Compliments

Enter d

на

会

21 Tothill Street, London S.W.1 Telephone: WHitehall 6711

Menonendum

from 2.s. Hershall

General

CONFIDENTIAL

Meeting with Mr. Fuang "en-chun

31st Januar 1967

Following our meeting on 11th January, arrangements he been made for us to visit Longworth Instruments Ltd., Abingdon, on Thursday, February 2nd. My memorandum of that meeting refers.

I took a present of eggs from my smallholding, and these were accepted. Huang and Li Wen-chun were in very good humour. Li left us alone.

(1)

(2)

We spoke of the forthcoming visit to Longworth Instruments. It occurred to us that there might be a Chinese medical officer among the seven officers now in this country to take over the ship built by Doxfords. If this was the case, Longworth wished to invite him to join us in examining their anaesthetic apparatus, and possibly to tour a local hospital, where he could see it in use.

No medical officer had arrived.

Agreed that we shall leave Gloucester Gate by hire car at 8.30 a.m. on February 2nd. Huang would be accompanied only by Y.F. Hsia, (A newcomer on the scene), and myself.

He could not stay overnight, and did not wish to return at a late hour. We may stay for dinner, but he would wish to be back in London by about 9 p.m. He would wish to visit a hospital and see the equipment in use.

He had informed the Foreign Office about the journey, and I undertook to pass the car registration number to David Wilson today.

I told him I had it in mind to ask Mr Keswick for permission to visit the Canton Fair in April. What was his view, and would he support my application?

No difficulty envisaged. I should inform CCPIT as usual, seeking their sponsorship, and he would be consulted. There should be no problem.

I wondered if I might not take the opportunity also to attend the Garments Fair at Shanghai if I made the trip.

(Huang) That would be simple, because the two fairs are both to be held in Canton this Spring, as a matter of convenience. They would be open at the same time.

Cont'd....

(3)

(4)

(5)

I asked if I might publish this information in our monthly bulletin. Agreed, but Huang particularly asked that I should preface the report 'I have heard that .....', 1.e, with no attribution.

In reply to my wish that the Canton Fair authorities should send us an invitation to each fair as a matter of course, Huang said that this was not done even for 'so-called Trade Commissioners and representatives of foreign countries in Hongkong and elsewhere'. Our present system worked very well, and we should continue as before.

(Huang) The ship at Doxford's will be formally handed over on or about February 17th. The name of the Director in charge of arrangements is Mr Stephenson. huang would support my request if I asked to be present at the ceremony, and ne agreed that we might publish photographs in our bulletin.

I asked whether his problem concerning the Prinex contract had been solved, as I had taken some action in the matter.

All was now well, the contract and specifications had been signed, and both sides were happy. Really? yes, really. He had given a dinner party for Sir Frank Kearton last night.

I assured him that I had taken prompt action following his complaint against the sewing machine company, (previous memorandum), and hoped we should soon have good news about that matter too.

He produced a letter from another company, and asked me to read it. The company informed him it was unable to fulfil the order placed in 1966, due to 'recent restrict- ions' imposed by the Board of Trade. The letter was dated January 24th 1967. I promised to look into the matter.

At this point he referred to 1966 figures, and what we would call the closing of the trade gap' Letters such as he had just shown me did little to improve trade

pr relations between our countries. ( sair).

نا

Cypher/Cat.A.

RESTRICTED

PEKING TO EXPORT CREDITS GUARANTEE DEPARTMENT

Chri

trade

RECEIVED IN

ARCHIVES No.31

1967

F26/1.

Telno. Exced 1

27 January, 1967.

RESTRICTED

fei/6.

город

Your telegram No. Exced 1.

We think it unlikely that payments will be affected.

When we have seen report in question we shall send further

comment by bag.

}

FT.

Mr. Hops an

Sent 0755 27 January

Read.12382 27 January

EXCED DISTRIBUTION

E.R.D.

RESTRICTED

ра стор

11/2

·D. I Moss Esq Far East Dept

F.O.

EXPORT

CREDI

DEPARTME

With the Compliments of

DR Johnso

EXPORT CREDITS

GUARANTEE DEPARTMENT

P.O BOX No. 272

BARRINGTON HOUSE

59-67, GRESHAM STREET

LONDON, E.C.2.

му

Ento.

Dom

37/1

ECGD

[1]

SCUT INT

(2)(a)

INCLASSIFIED

PRIORITY

RESTRICTED

IMMEDIATE

CONFIDENTIAL

SECRET

Authorising A, STEE

officer

26.1.07

(5) Divisional Reference

Time

9.500

05. 119/10.

(4)

To :-

(6) Buyer

(7) Telegram to Paturay or

Consulate or Trade

Cominiocer etc. at

(8) Repeat to

For use of Despatching

Department:

Despatched

Please return duplicate copy to:

Export Credits Guarantee

Department,

59167 Greeting Ctreet,

London, F.C.2.

9305+

(9)

(*)(6)

IN CLAIR

RECEIVED IN ARCHIVES No.31

31 JAN 1967

1 6/1

го

Q/MORDS TO BE ENCODED IN

6.T.C.

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SAVING

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Sino-British Trade Council

中英貿易协会

President: Mr. John Keswick C.M.G.

Sponsors: The Association of British Chambers of Commerce

The Federation of British Industries

Our ref: NFW/VR.

The China Association

The London Chamber of Commerce

To members of the

21 Tothill Street, London S.W.1 Whitehall 6711

24th January 1967.

Executive Council

De ar

fur moss,

Recort for 1966

I am sending you herewith copy/ copies of a report for the year 1966. The President considered that it would be useful to have on record a summary of the year's activities and it has been prepared for the information of ourselves, our Sponsors and those concerned in the Board of Trade, Foreign Office and BNEC.

RECEIVED IN ARCHIVES No.31

27 JAN 1967

FC6/1

Yours sincerely,

N.F. Tebb Secretary-General

FCG/1.

22 January, 1967.

I write on behalf of the Foreign Secretary to thank you for your letter of 10 Janu ry,

The follow-up

into view

Mr. Keswickin

with

the sols.

Hoy

1. H. Domm

2 M Bollag

tion

(Miss T.. Kelly) 25/ Private Secretary

John Keswick

Sq.

Си

abo 25/1

CMO,

Matheson & Co. Ltd.

3 Lombard Street, EC3

FCB/F with

中國

Sino-British Trade Council

With Compliments

REPORT FOR 1966

21 Tothill Street, London S.W. I

Telephone WHitehall 67||

中英貿易协会

SB Sino - British Trade Council

中英贸易协会

President: Mr. John Keswick C.M.G.

mary: The Association of British Chambers of Commerce

The Confederation of British Industry

The Chima Association

The London Chamber of Commerce

21 Tothill Street, London S.W.1 Whitehall 6711

Report for the year 1966

(1) General Situation

Nota

DOM 2/1

Аря

B.U. Apli Pape

при

This year has seen the start of the Third Five Year Plan and although no details have been disclosed it is generally accepted that agriculture has the first priority. Preparations for the plan were pushed along with the greatest enthusiasm in the latter part of 1965 and reports from China indicated that it got off to an excellent start. Then came the great proletarian cultural revolution, which flared up in August and manifested itself in the activities of the Red Guards. What effect this will have had on the economy as a whole is a matter for speculation, but the mere fact of moving several million additional people on the railways must have had considerable impact on the transport-, ation system, while attempts on the part of the Red Guards to enter into factories which early on was the subject of admonition from the Premier, and general interference in the daily life of the people including the educational establishments cannot be conducive to a sustained increase of economic activity. Reporte of the volume of trading at the Canton Fair, held from the 15th October to the 15th November are somewhat conflicting but there is some evidence that some of the traditional items of produce were in short supply, Droughts particularly in South China follow- ing severe typhoons in June may have adversely affected the rice and grain harvests.

The attitude of the Chinese towards Great Britain remaina unchanged and the general tone is that they regard Mr Wilson's Government as being even more under the influence of the USA than the former one. It remains difficult to determine the real influence of this factor on the actual amount of trade transacted, but the embargo list and the import quota system are constant irritants to the Chinese and they lose no opportunity of pointing to them as a reproach and as a handicap to proper expansion of business between the two countries. The trouble over a computer and other export licensing difficulties early in the year can only have done harm to our cause, but just how much may not be revealed

Cont'd....

until later on. In any case these are problems of major Govern- mental policy. Meanwhile figures for the year show excellent progress with a substantial increase over 1965 and a narrowing of the import/export gap. However these must be read together with those of our principal competitors in the Free World, Japan, West Germany and France, although it is true that Japan is in a special position, with its geographical proximity to China and its capacity to take large quantities of raw materials from China in exchange for the machinery and fertiliser that it manufactures:

U.K.

1964

1965

Increase

*1966

Increase

Exports to China

£17.7 M.

24.9

40.1%

31.9

28.1%

Importa from China

24.6

29.7

20.7%

33.8

13.8%

Total

42.3

54.6

29.1%

65.7

20.3%

France

Exports to China

17.8

21.5

20.8%

16.2

(Jan/June)

Imports from China

11,0

15.9

44.5%

10.1

(Jan/June)

28.8

37.4

29.9%

West Germany

Exports to China

9.1

28.2

309.9%

32.2

(Jan/Sept)

Imports from China

18.5

26.0

40.5%

15.6

(Jan/June)

27.6

54.2

96.44

Japan

Exports to China

54.2

88.2

62.7%

87.6

(Jan/Sept)

Imports from China

56.5

80.9

43.2%

83.5

(Jan/Sept)

110.7

169.1

52.7%

*Provisional

Prospects for the immediate future are difficult to assess and the dominating influences must be the internal situation in China and political relationships between U.K. and China. Either of these factors could inhibit the placing of large orders e.g. for complete plante. There is however no indication that ordinary business will fall off, and the U.K. is still China's best customer in Western Europe, so that it is reasonable to expect that steady progress can be maintained.

- 3-

A summary of the Council's activities during the year appears below, and it would be right to state that the organisation is working well, and is becoming progressively better known to British industry. This is due particularly to the fact that the membership of our four Sponsors, with whom excellent cooperation has been maintained, covers such a wide field. Full support and advice have been received from the Board of Trade with whom very good arrangements for the exchange of information have been developed, and a friendly and most satisfactory relationship exists with BNEC, from whom assistance and advice has always been forthcoming. Additionally SB TC is in good standing both with the Chinese in UK and the China Council for the Promotion of International Trade and the Trading Corporations and others in China.

(2) Council

(A) Changes. In January Miss S.I.L. Elkin, ABCC member of the Working Committee, resigned and was replaced by Mr A.S. Gilbert, C.B.E.

Pendred.

The death occured suddenly in April of Mr Vaughan

Mr John Shewan resigned at the end of June.

Mr. R.L. Davies (Board of Trade), Mr R. Reid-Adam, C.B.B. (BNEC) and Mr D. Wilson (Foreign Office) joined as observers in June.

Vesers Davies and Wilson were replaced respectively by Mesara b. MacTavish (November) and D.J. Moss (October).

Mr. N.W. Waite joined in October.

Mr. H.8. Stebbing joined in December.

(B) Organisation. (1) The structure and organisation of the Council were examined and debated, with particular reference

were to its relationship with BNBC. The conclusion that was reached in Kay was that the existing arrangement was most suited to the peculiar aspects of the China trade, but that relationships with the Board of Trade, the Foreign Office and BNEC would be stren- gthened by the appointment of observers from these bodies to the Council.

in July.

(11) Terms of reference for the Secretariat were adopted

(111) Following visits to Scotland by the Secretariat and the Chinese the need for some representation there became apparent and agreement was reached with the CBI in November where- by the CBI Scottish office undertakes representation of SBTC in Scotland.

(3) Vieite to China

(A) The President, Mr John Keswick, accompanied by the Secretary-General went to China in the latter part of March and atayed in Peking for 10 days. The visit was overshadowed by the political atmosphere and in particular the "computer trouble"; nevertheless talka were held with C.C.P.I."., all the trading corporations and the Bank of China. Close contact was maintained

- 4 -

with H.M. Chargé d'Affaires and the Commercial Counsellor and his office.

It became apparent that the Complete Plante exhibition was unacceptable in its proposed form and would have to be abandoned

After Peking Mr Webb went to Tientsin, Wuhan and Shanghai, visiting factories and communes before proceeding to Canton for the opening of the fair. Together with Mr A.J. Hunter, 1st Secretary (Commercial) in Peking, he entertained British and Commonwealth visitors to the fair.

(B) Mr Marshall went to Tientsin in September where he attended the SIMA exhibition throughout. This was held in conditions of difficulty due to the Cultural Revolution then being in full swing.

Afterwards he spent some time in Peking and Shanghai before proceeding to Canton for the opening of the Autumn Fair. Again the opportunity was taken to entertain British and Commonwealth business-

men,

(4) Chinese in London

In March Li Shu-te was replaced by Huang Wen-chun as

Commercial Secretary.

Li Meng-hou, Commercial Counsellor, left for China on the 9th August, There is no immediate indication of his return, and Huang Wen-chun has been 'acting in his absence.

Regular visits to the Commercial Counsellor's office have been made by Mr Marshall or Mr Webb and communications have been improved as a result. In addition arrangements have been made on a number of occasions to accompany representatives of firms on visite to Gloucester Gate, as well as to accompany the Chinese on trips to factories. At the beginning of June SBTC together with the CBI Scotland arranged a tour for Messrs Li Meng-hou, Huang Wen- chur., Hsu Chao-hsiang and Kao Kuo-pei, in Scotland. Mr Marshall conducted the party which spent the last night in Mr Keswick's house before returning to London.

By arrangement with the organisers, complimentary ticketa are regularly received for exhibitions and showe, and passed to the Chinese, Some 40 events were covered in 1966.

Following the announcement made to Mr Keswick by Chairman Nan Han-chen of CCPIT in Peking in March that the Chinese were plan ning an Arts and Crafts exhibition in London in August SBTC provided assistance in finding a suitable site and offered sponsorship. event was called off on the grounds that there were too many difficulties.

(5)

categories:

Chinese Visitors to UK

Visitors to this country may be divided into three

The

(1) Those who come for training. Such an arrangement is normally part of a sales contract for a plant or for equipment. In 1966 there have been several such parties, including some for Marconi, Doxford's, Plessey etc.

- 5-

(ii) Those who are invited to special events, e.g. The Chemical Society Anniversary meeting at Oxford, the 5th International Pressure Die Casting Conference in London, the Hovercraft Show etc.

(iii) Missions from the Trading Corporations, for research

and/or purchasing. There were only three in 1966 viz:

Metals and Minerals

Instrumenta

Machinery

(Stayed over three months)

(Stayed ten weeks)

(The General Manager of the Textiles Corporation was due to arrive in June, but the visit was cancelled without notice.)

Receptions were held for the above as follows:

Metals and Minerale

Rooma, attended by 71 people.

on the 4th May at the Connaught

Instruments and Machinery

Savoy, attended by some 210 people. the Board of Trade, was present.

on the 8th August at the Lord Brown, Minister of State,

(6) H.M. Charge d'Affaires in Peking and Staff Visiting U.K.

(A) (1) Mr Alastair Hunter, let Secretary (Commercial) was entertained to lunch on the 4th July.

(B) Mr Donald Hopson was entertained to lunch on the 21st September, and members of the Council had the opportunity to hear from him a very valuable interpretation of the current situation.

a strenuous programme during November and the first part of December speaking to groups and to individual companies, who were thus able at first hand to get the benefit of his advice and his up-to-date assessment of the prospects for trade with China. He gave talke as follows:

London. Audience 150

17th November

23rd

25 th

29th

2nd December

Glasgow.

B'ham.

25 (Subscription

lunch)

Leicester,

Southampton.

The above were arranged by the SBTC in conjunction with the Board of Trade, CBI, and the respective Chambers of Commerce, and an SBTC representative accompanied Mr Peters.

(7) Lecture Tours

The following lectures/talks have been given during

the course of the year:

- 6 ·

Place

Date

Audience

Speaker

rmingham

15th Feb.

P.S. Marshall

Overseas Service

College (Farnham)

10th March

Glasgow

22nd March

Edinburgh

19th April

Dundee

20th April

Cardiff

Leeds

15th June

H.Flint/P.S.Marshall

20th Oct.

N.F. Webb

(students)

Bradford

20th Oct.

Woolwich (Polytechnic)

27th Oct.

P.S. Marshall

Liverpool

2nd Nov.

H. Flint

Manchester

8th Dec.

P.S. Marshall

(8) Bulletin

Regular publication has been maintained and the number of copies sent out each month is as follows:

China Association membera

170

China Association complimentary

104

8BTC subscribers

147

BBTC complimentary

Total

506

The estimated cost of production in 1966 ia £650 against which the revenue from the SBTO subscribers is about £460. The peak number of subscribers was in September 1965 when it was 160. Since then it has been as low as 128 in June 1966 and although a fair number of new subscribers are constantly being signed up, it is proving difficult to maintain the old ones, in spite of repeated follow ups. One measure that is being adopted to overcome this is the introduction of a Bankers Order form for subscriptions.

(9) BNEC

The President was invited to attend the Council meeting of the 26th September.

The Secretary-General regularly attends the Area Secretaries meetings. He also took part in the weekend conference arranged at Wexham Springs on the 3rd and 4th June.

SB Sino - British Trade Council

中英貿易协会

President: Mr. John Keswick C.M.O.

The Chics Association

reober of Commerce

Spamon: The Association of British Chamber of Commer The Confederation of British Industry

The London

January 1967

21 Tothill Street, London S.W.t Whitehall 6711

COMPOSITION OF THE "EXECUTIVE COUNCIL"

President:

Mr. John Keswick, C.M.G.

Mr. H.F. Bibby,

Director,

Associated Electrical Industries

International Ltd.,

33 Grosvenor Place,

LONDON, S. W. 1.

Kr. J.F. Bramley,

Managing Director,

British Motor Corporation

Export Sales Ltd.,

Longbridge,

Chairman of Matheson & Co. Lta., 3 Lombard Street, LONDON, E. C. 3.

MANsion House 6555

Representing

The London Chamber of Commerce.

BELgravia 1234

BIRMINGHAM.

Mr. J. Brereton,

Local Director and Assistant

to Marketing Director,

Vickers Engineering Group, Ltd.,

P.O. Box 177,

"Vickers House",

Representing

The Association of

British Chambers

of Commerce.

BIRmingham Priory 2101

Representing

The Confederation of British Industry.

TATE Gallery 7777

Millbank Tower,

Millbank,

LONDON, S. W. 1.

Mr. Eliot Hodgkin,

Overseas General Manager,

Imperial Chemical Industries, Ltd., "Imperial Chemical House",

Millbank,

LONDON, S. W. 1.

Representing

The Confederation of British Industry.

VICtoria 44

Mr. A.E. Marker, Director

Arnhold Trading Co. Ltd., "Creechurch House",

Creechurch Lane,

LONDON, E. C. 3.

Mr. 9.C. Seward, 0.B.E.

Chairman,

Platt Bros. (Sales) Ltd., "Oceanic House",

la Cockspur Street,

LONDON, 8. W. 1.

Mr. J. A. Stafford,

Joint Managing Director, Rank Taylor Hobson Division

of the Rank Organisation,

P.0. Box 36,

Leicester House, Lee Circle, LEICESTER.

Representing

The China Association.

AVEnue 1122

Representing

The Association of British Chambers of Commerce.

TRAfalgar (1023

Representing

The Confederation of British Industry.

Leicester 23801

Mr. H.S. Stebbing,

Managing Director,

Barrow, Hepburn & Gale (Machinery) Ltd.,

19 Grange Road,

LONDON, S. E. 1.

Mr. N. W. Waite,

Export Manager,

British Insulated Callender'8

Cables, Ltd.,

P.O. Box No. 5,

21 Bloomsbury Street,

LONDON, W. C. 1.

Representing

The London Chamber of Commerce.

BERmondsey 4525

Representing

The London Chamber

of Commerce.

MUSeum 1600

Mr. E.S. Taylor

(Chairman)

- 3 -

WORKING COMMITTER

Head of E. European & N.

Asian Department, Confederation of British

Industry,

21 Tothill Street, LONDON, S. W. 1. (Tel: WHItehall 6711)

Mr. H.J. Collar, C.B.E.

Secretary,

The China Association, "Broad Street Hous0", 54 Old Broad Street, LONDON, E. C. 2. (Tel: LONdon Wall 1160)

Mr. A.S. Gilbert, C.B.E.

Assistant Secretary,

The Association of British

Chambers of Commerce,

68 Queen Street, LONDON, E. c. 4.

(Tol: CITY 7211)

Mr. H.M. Bullard

Head of Overseas Dept., The London Chamber of

Commerce,

69 Cannon Street, LONDON, E. C. 4.

(Tel: CITY 4444)

Secretariat:

Mr. K.F. Webb

Mr. P.S. Marshall

Secretary-General

Chinese-Secretary

Mr. B. MacTavish

Mr. D.J. Мова

Mr. R. Reid-Adam, C.B.E.

OBSERVERS

Representing

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RECEIVED IN

ARCHIVES No.31

Sino - British Trade Council 24 JAN 1967

中英贸易协会

President: Mr. John Keswick c...

Feb/1.

V DOMES

The Association of Belsh Chamber of Commerce The Confederation of British Industry

The China Association

The London Chamber of Commerce

CONFIDENTIAL

21 Tothill Street, London S.W.1

Whitehall 6711

23rd January 1967.

Dear

fur hross.

F8th"?

We have been informed that at masa meeting of finance and trading corporations Peking January 21st presided over by Chou En Lai twelve resolutions were adopted to be followed by all organisations throughout China. Summary of resolution No. 9 reads quote in order to preserve and promote China's international reputation an urgent measure should be taken to solve the present probleme.

Firstly, solve the harbour blockage problem to ensure national imports being discharged in time and exports being loaded in time. Secondly, strictly implement contracts with the foreign countries. Any persons agitating stoppage of work among harbour workers will be severely punished. Thirdly, all letters and cables should be replied promptly. Fourthly, efforts should be made to conclude sales of export commodities and purchases of imports so that every effort will be made to reach and surpass the targets of foreign trade in 1967. Unquote.

Repented by fel. from Peking

بھرا

JOM 25/1

Yours sincerely,

N.F. Webb Secretary-General

116

Garved

P.W

RECEIVED |ARCHN

23 JAN 1967

with

TRACE WITH CHINA

You asked for a breakdown of the figures for our exports to China in 1966 by categories of goods exported, for your dinner with Mr. Keswick, whose letter is attached. The detailed breakdown is not yet available for the full year in the Board of Trade, but I attach figures for January to November 1966 with corresponding figures for January to Kovember of 1965 for comparison. I have included only the items which accounted for more than £ 1 m. in the first eleven months of 1966.

2. The increase under the machinery heading is parti- cularly large and more than proportionate to the total increase in our exports. Of the three sub-headings Electrical, non-electrical, machinery and transport equipment, the second shows much the greatest rise (€ 5.7 m. to £9.2 m.). This tends to support

your theory that the plants sold in 1964 have now been completed. There are also, however, striking increases under some other headings such as textile fibres and scientific equipment.

Szara.

Many

tanks

Til 2011

1. Huarand

(D...ildyard)

19 January, 1967.

25.

V.K. Exports to China

(50.)

Jan-Nov

1966

Jan-Nov

1965

Total

28.877

22.863

Textile Fibres not manufactured

2.113

0.889

Chemicals

2.452

2.967

Manufactured goods classified by material

8.314

8.120

of which Iron and steel

4.699

1.591

Non-ferrous metals

2.623

4.839

Machinery and transport equipment

13.259

9.035

of which electric

3.291

2.253

Non-electric

9.207

5.732

Scientific, photographic and horological

gooda

2.547

1.624

TELEPHONE:

MANSION HOUSE 0545.

TELEGRAMNIC ADDRESSES ·

FND: MATHESONS TELEX LONDON MATHESONS LONDON-EC 3

FORCION

TELEX SERVICE

2-2100

RECEIVED IN

ARCHIVES No.31-

26 JAN 1967

FC6/1

Ach I Thank See is toda

Matheson & Co. Limited

3 Lombard Street.

London, E.C.3.

16th January, 1967.

Dear Secretary of State.

INO-B

Thank you very much for sparing time to talk with me about China last week. I only wish that the situation was more favourable. Let us hope that it develops that way.

In the meantime, the trade statistics for 1966 have come out, which show that our total two-way trade for China for that year was £65.7 million, compared with £54.6 million for 1965, an increase of 20%.

When the Sino-British Trade Council organised the Peking Exhibition in 1964 the figures for the previous year were £32 million, and I stuck my neck out saying that we would increase them by 50% within five years, so it is gratifying to see that they have already been doubled.

I hope and feel that the S.B.T.C. is work- ing along the right lines with the help of the manufacturers and trading firms who persevere in this rather difficult area.

Caus suicely

Sunkeswick

John Keswick.

The Rt. Hon. George Brown, M.P.,

Secretary of State for Foreign Affairs,

Foreign Office,

Downing Street,

LONDON, S.W.1.

Telephone

RECEIVED IN

Mansion House 6565

ARCHIVES No.31

24 JAN 1967

3 Lombard Street,

London E.C.3.

13th January, 1967.

Feb/1. Dear Tevence

I am delighted to hear that you and your wife can come to dinner with us at

5 Chester Place, Regent's Park, on Thursday, the 19th January, (8 p.m. - Black Tie), when we shall have with us Theodore Peters and his wife, and one or two others.

We shall very much look forward to seeing you that

evening.

amusdum.

ив

كل

Iwant to talk our the trade toweds for 1987. Artour de La M4 is enting.

Ps.

John Keswick.

T.W. Garvey Esq., C.M.G., Foreign Office, Downing Street, LONDON, S.W.1

1966 figs 265 mullen Wall

20% up on 65.

Ed (1625)

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RECEIVED IN ARCHIVES No. 31 £ 23 JAN 1967

Sino-British Trade Counci

President: Mr. John Keswick duo.

Feld!

Enter and

Asociation of Brush Chamber of Commente

The Confederation of Britisis Industry

The Qua

Association

The London Chamber of Commerce

Our ref: 058.-/NFW/VR.

叭

dia DOM B3/1

Members of the Executive Council.

Do&

kur toss.

21 Tothill Street, London S.W.1

Whitehall 6711

19th January 1967.

We do

Please refer to Item II (b) of the minutes of the Council meeting of the 5th July 1966 and Item I (b) of the minutes of the meeting of the 3rd January 1967.

The China Association have proposed as their two

new members the following:

Hr. V.H. LicNeill, C.B.E., Chairman and Managing

Director of the Glen Line Ltd.,

Kr. H.J. Collar, O.B.E.

Both these gentlemen will oe well-known to you. H Collar's place on the Working Committee will be filled by Mr H.B. Williamson, the new Secretary of the China Association.

Will you kindly advise me if you support the above two nominations.

The present status of the Council is as follows:

London Chamber of Commerce

Mr.H.F. Bibby

Association of British Chambers of Commerce

Mr.H.S. Stebbing

Kr.N.W. Waite

Mr.J.F. Bramley

Mr.S.C. Seward, 0.B.E.

Cont'd....

Confeceration of British Industry

Kr. J. Brereton

Hr. Eliot Hodgkin

Mr. J.A. Stafford

Mr. A.E. Karker

China Association

Finally Kr. A.R.B. Hore is leaving the London Chamber of Commerce at the end of January and his successor on the Working Committee is Ir. H.M. Bullard, the new Head of the Overseas Department of the Chamber.

For information

Yours sincerely,

N.F. Webb Secretary-General

Ed (1426)

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CRE 311/66

BY DIPLOSTIC AIR BAG

sh. Moss

F.D.

BOARD OF TRADE

Commercial Relations and Exports Day RECEIVED IN

ARCHIVES No.31

1 Victoria Street, LONDON S.W.1

Telex: 25955 Answer Back: BOTHQ LONDON 20 JAN 1967

Telegrams: Advantage London S.W.1

Telephone: xxrwx:3900, ext. 2747

Albey 7877

17th January, 1967

FC6/1

This is merely to let you know that Plesseys have been in touch with me about the know-how agreement they concluded with the Chinese in 1965 for the manufacture of carbon track potent:sakāss in China.

Under the terms of the agreement Plesseys have hud Chinese technicians at their factory, and it is possible that within the next few months or so the Chinese may wart Plesseys engineers in China. The firm are a little vorried about this because of the current disturbances and have sought our advice about letting en, ineers go to China.

We have taken advice from the Foreign Office on this and have informed the firm that at the moment ve have no reason to believe that foreigners in China would be

I have, badly treated or that for the time being at any rate no-one should go. however, asked Plesseys to let me know immediately they are requested by the Chinese

This firm to send engineers so that we can inform them of the current situation. has perhaps been a little remiss in not keeping in touch with us about their activities in China but they are, of course, not obliged to do so. the dramatic political situation in China they are now understandably worried.

Because of

If you have any general coments to make about visiting British engineers to China at the moment I should be glad to have them,

Whilst writing on this subject you may like to know that English Electric have

This is on an erection just sent an engineer called Phillips to China for six months. job for the Sinon-Carves fertiliser plant. I do not know whether he will have managed to call on you as he passed through Peking but I gather that he has arrived

This is encouraging. safely and has no complaints about being sent to China.

I am copying this letter to David Moss at the Foreign Office.

A. J. Hunter, Esq.,

First Secretary Comercial Peking

2. Putu ga

(A. X. Rogors)

* C

reeing Plessey's Mo. Rogova

~ te

mounted.

300m 20/1

SB Sino - British Trade Council

中英貿易协会

President: Mr. John Keswick C.Mu

RECEIVED IN ARCHIVES No.31

1 8 JAN 1967

FC6/1

The Association of Bewish Chamber of Commerce The Confederation of British Industry

The China Association

The London Chamber of Commerce

CONFIDENTIAL

Our ref: NFW/VR.

21 Tothill Street, London S.W.1 Whitehall 6711

18th January 1967.

Members of the Executive Council.

Dear her heres.

The President has asked me to send you copies of

the following:

(1)

(2)

A sheet of press cuttings that carry the recently announced figures for our trade with China. He feels that these are sufficiently impressive and suggests that members take any opportunities of making use of them in appropriate quarters.

A report on his meeting with the Foreign Secretary, Mr George Brown, last week.

A copy of the cutting from the New York Times referred to in Mr Keswick's footnote is also attached for your interest.

for information.

1. Enter

2. Mr. Danion

S.NU.

Praini

paragongh

이

Yours sincerely,

N.F. eob Secretary-General

Jerom

10.

report

Keswiete

이

they 18/1

The

Last

recent meeting with

GUARDIAN

F. TIMES / 14-1.67.

U.K.'S SUBSTANTIAL TRADE

£31.9m

SURPLUS WITH CHINA

By Our Far East Correspondent

since

Balish exports to China rose 28.1 per cent. last year to a total of This is the highest ligure since 1960 when the Chinese

las being prepared for the Great Leap Forward. Imports from China were also

econoń

up substantially but not as much I the situation becomes more stable, as exports: they increased by 138ut there should be a continued flow per cent. lo a total of £3.km.

The trading figures for Devem- ber which became available yesterday show 7 substantial surplus for Reclaın. Exports to Chuna amounted 10 £1,038.494- while Imports wate worth! 12.184,103. The low figure for; Chinese exports may have been partly the result of Mao Tse lung's Cultural Revolution which has shown signs of extending itself to ? the economy in recent weeks

Last year's sharp rise in trade with China wan wekomed yester- day by Mr. John Ketwick. Presi dent of the Sino-Brush Trave Counci. Mr. Keswick told THE Francial Tours that he was pleased and satisfied" with the Kgures, and added that his own estimates of the potential for trade between the two countries had been substantially borne out-if not handsomely exceeded.

The volume of twoway trade last year was in fact coughly double that of 1964, the year m which Britain staged a major industrial exhibition in Peking. At the Peking exhibition Mr. Keswick expressed the view that

50 per cent the in trade was a practical possibility.

Views of the prospects for Chine trade 1967 depend on nac's estimates of the extent to which the current upheavals in the country are likely to (abrupt the economy. Some observers feel that China may sign fewer con- tracts for major capital goods until

THE TIMES 16-1-67

U.K. EXPORTS TO

CHINA UP 28%

of "normat trade.

U.K. exports to China during the period January to December, 1966, showed a rise of 28,1 per cent on the previous year's figure. Sales for the period totalled £31,9m. compared with £24.9m. In 1965. In Dec- ember, 1966, the U.K. exported £3,063,494 worth of goods to China

In the

Imports in this country from China also rose-by 12 per cent--last year. January to December period they totalled £33.3m compared with £29.7m, a year earlier. During the month of December. 1966, the U.K. Imported goods to the value of £2,184,103 from China. Total two-trade during 1966 Increased by 20.3 per cent

D. TELEGRAPH Willy D-TIFL

50.

BRITISH EXPORTS /4/f Increase of 28 p.c.

But provisional figures released In London showed that trade be tween Britain and China had not suffered in 1966. British exports 21 to China in 1966 were estimated to be worth nearly £32 million. against just under £25 millon .a 1965, ad increase of 28 per cent. Imports from China increased by nearly 14 per cent., from £29.7m. to £33.8m. Despite de- partures from the Chinese Em- bassy in London, the commercial department is still operating as uspal.

* *

Pilots of the Nationalist Chinese Air Force operating from Formosa claimed to have shot down two Communist MIG-19 fer fighters 34 yesterday. It was the first air battle of the Chinese coast stace 1960.

Picture P16

GUAR..AN

Exports to Chine

in danger

By our own Reporter

Brit... industrialist, are keepe ing a close watch on reports of the troubles in China, feading that a new peak in nere exparis there economic reaction next youn

may

The trade faire, for love, at published yesterday by the Sine. British Trade Coline.

against a

"The of 28.1 per cent in Brush exports to China, to a latal of £31.9 millions. This worked rive in UMERIA GI 13.8 per cent, to leave. * Bap against us of £1.8 millions. greatly intproved British position.

The improVIS at was greatly assisted by

tracts for industrial plant com- pleted last year but stemming from the 11 exhibition in Peking. Win

fear is th...

and administer ki

102 the Dar2

Homestic

upheavals will prevent them from convalidating the gains.

Figures down

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In feedstuk and liver stock to the changed,

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■

14-1-67

RECORD EXPORTS TO CERINA

RITAIN'S EXPORTS to Red China reached a record total of nearly 432 million last year-28 per cent up uk 1965. They beat the previous record in 1960 by a short head, IMPORTS from China last year were up by 13 per cent over 1965-to the 433.8 million mark.

MEMORANDUM

CONFIDENTIAL

SINO-BRITISH BRADS COUNCIL

OBETA

JAN 1937

Mr. George Brown granted me half-an-hour at the Foreign Office last week. Mr. Arthur de la Mare was also present.

I explained the set-up of the S.B.T.C. and gave some statistics of trend of trade over the last twelve months or so.

I said that, unfortunately, politics inter- fered in trade and this made our progress diffi- cult. I said that the Chinese regarded the "Wilson Government" as being unfriendly to them, owing to Britain's support of America in Vietnam and the attitude of such bodies as "The Times" and the B.B.C., who are regarded by the Chinese as official mouthpieces, and said the situation is further complicated by the COCOM Agreement and the Import Quota List.

Mr. Brown gave me a clear exposition of his own attitude to China which has been consistently friendly. In fact, he has spoken in favour of China becoming a member of United Nations, and he is actively trying to seek an end to the Vietnam War and felt that China had no justi- fication in their critical attitude.

I said that I had followed with much interest the public statements he had made about China. They had all been favourable, but I was merely reporting what the Chinese felt and said about us, and that, unfortunately, as long as the present Vietnam War and the Cold-War situation in the world persists and our relationship with America continues in its present close association, there is little hope that the political climate in Peking will improve for us. Meanwhile the French, and to some extent the West Germans, are well favoured and the Japanese take a large percentage of the trade. Mr. Brown asked why this should be and I explained that with the Japanese it was, in part, geographical proximity, and in part the fact that Japan was ready to take huge quantities of China's exports which were unsuited for our or European markets.

Mr.

Brown said that he had been looking at various suggestions for the betterment of our position with China and I sought his support for the publication of a Technical Journal in Chinese: he has the matter under consideration.

We then had a discussion on the present Cultural Revolution and it was agreed that the situation is very difficult to analyse and it is impossible to predict an outcome. He asked if I would suggest what would be the best solution given the present broad picture, the

-1-

-2-

personalities and the state of China's economy, and I said that we should hope for a situation in which the presence and spirit of Mao is preserved in China but that the administration of the country was left in the hands of Chow with his five ministerial colleagues. If this should be done at the expense of Liu and Teng, I doubted if the West would shed any tears for them. "Mao" will live for a hundred years; Liu, who does not appear very clever, can easily dis- appear.

Mr. Brown appeared to be very well briefed on many aspects of the situation. He said that he wished to take an increasing interest in developments in the Far East, and I think that from the $.B.T.C.'s point of view, the visit wes well worthwhile, and I hope that I can go again one of these days.

Juu Leide

ни

John Keswick.

16th January, 1967.

ли

Ps lattade an actide ju

New Tak Times Hammary 1322

Калиму which is, for my part, a fred exposition of the Cuia

frocan

The Struggle in China

Analysts Believe Mao and Lin Cannot Win in Their Fight to 'Reform' Party

By CHARLES MONIK

Jardiel je Tae New York Timet,

HONG KONG, Jan, 12-Most Many of the present opposi experienced analysts of Chinese) tion had agreed with Mr. Mac jaffairs believe that Mao Tse-but reality forced them to pull Lung and Defense Minister Lini back. It took China at least Piao cannot--in the long run three years toʻrecover from the -win their fight to "reform"¦ economie reverses of tha greșt the nation's Communist party leap, and to do so the nation had to be made less "Com- organization.

It is because their polley) munistic" than before the leap alme and goals are apparently began.

News

Analysin

Impractical, Private plots for farmera and even destruc-, small rural work teams, dif Live, that Mr. Mao¦ferential, wage scales on the and Mr. Lin will basis of axlila in industry and

of #tops

ideologica probably fail, such other analysts believe. Į backsliding were instituted and The present conflict in Com- even today, remain in foren, munist China has pitted a reja. [tively amali group headed by One factor which maker contr

'Concept of Self

promise so

difficult in the

Mr. Mao and Mr. Lin against

■ larger group of their old present struggle is the clarity comrades, including many prov" with which everyone can sel |inclal party bosses.

that Mr. Mao and Mr. Lis prob It is easier to understand the ably want to repeat the poilcisi nature of the struggle when of the past.

it is recalled that, while Mr. They themselves have defined Mao has always had the titis]thele "cultural revolution" al of Party Chairman, most of primarily almed at "eradicating the day-10-day control of party the concept of self" and thui and national affairs had been create a climate for an econom) wielded by others from late in which people work for love 1958 until the middle of last of the collective and not for year. Mr. Mao and Mr. Lin, "material incentives." are now trying to gain efface Another factor which maker Uve control.

compromise difficult is that li Many analysts think it is) is repugnant to the party, bou probably too late now for the personally and ideologically, t [struggle to be resolved by aḥaccept army officer Lin Piac lasting compromise, but few canțas the next head of the party yet take seriously the pos- Finally, the mysticism, ine sibility of armed civil wAT, tolerance and unreasonablenés To resolve the conflict in his of the Mao-Lin forces and or ¡favor Mr. Lin. Mr. Mao's heir|their Red Guard and "revolu- 'apparent, would probably havs|tionary redei" followers pose i to succeed in a widespread threat to a wide circis of faith. of provel purge of the nationwidą partyful Communists organization, replacing many!merit and to much of the gen present officials with army of-jeral population. ficern or young adherents,

Party Meeting

Analysts do not doubt that opposition is very strong and

If the other side wins, it win widespread. probably do so in a party Opposition Grows Larger meeting. In fact, many analysts The extraordinary admusslor think that if the full party, made by the pro-Mas preas the Central Committes could moet weck were accompanied by now, it would probably vola agentions that the Chines Mr. Mao and Mr. Lan down, masses and the "revolutionary" Although it probably would re-party members and bureau tain Mr. Mão as a figurehead|crats had seen through a ple to prevent further national and were uniting to amach it discord.

But the truth is that no on

The opposition to Mr. Mac, can be sure who is winning a and Mr. Lin is partly explain this poat

ed by events in 1958 when he However, one analyst remark 'decreed the "great leap for-led that every week the "Va ward," an attempt to speed up|ible members of the Mao-Db the transition to pure Com;faction seem to grow fewer am muniam and to "put polities in every week the Hạt of those ac Command" of China's econ-lgused of opposition grow

Farger.

(1120/67) CONFIDENTIAL

D. J. Moss, Esq., Far Eastern Department.

RECEIVED IN ARCHIVES No.31

1 8 JAN 1967

FC6/1

To su

Hou

KiKeswick's call

With the compliments of

COMMERCIAL SECTION

Thi

(A. J. Hunter)

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(1120/67)

CONFIDENTIAL

Office of the British

Charge d'Affaires,

PEKING.

4 January, 1967

A but wi 168

In another letter in this bag I am reporting the probable postponement of the Swedian and Swiss exhibitions which were to have been held in Faking this year, and a change of site for the Danish one, which is in any case likely to be held in very difficult circumstances.

2. This is only one element in a fairly considerable change for the worse which has come over the foreign trading picture here during the last few weeks, and which makes the prospects for trading activity in Peking in 1967 pretty bleak. There is still no evidence of any deliberate change in Chinese trading policy, nor indeed that the Cultural Revolution will in practice prevent the Chinese from continuing to trade with the "est according to their economic needs. But it is likely to be more difficult than ever for us to take the initiative in trying to maintain and increase our share of this trade.

3. It has become evident during the past week or two that the Cultural Revolution will not, as we had faint hopes it would, go into partial ibernation until the Spring; and that if things go as at present planned, the intensity of revolutionary activity will increase from A-ril onwards. Horeover the first important political document of the year - the New Year's Day editorial in the People's Sally lista as the first of the four ways in which the revolution is to be pursued during 1967 the extension of revolutionary activity into factories, mines and rural areas, which have hitherto been largely exempt from these distractions.

。

What effect will these developments have on trade? It is fairly obvious that despite what the New Year's Day editorial says to the contrary, any large scale extension of revolutionary activity to workers and peasanta is likely to affect production, and possibly foreign trade in ite turn. But even if it does happen, the effect of a fall in production on foreign trade will not be felt during the coring year. *

5. Neverthelers, although trade between China and other countries Bocna likely to continue at much the usual rate, all the aigne are that as much of it as possible will take place away from the political stora centre in Peking. Apart from anything else, the Chinese trading corporations in Peking are going to continue to have little time available for any but the most essential trading activity. Visas for British and other foreign business men to come here - or indeed to any cities in Chins outside Canton at Pair-tine are likely to be scarce: than ever. The fate of the Scandinavian exhibitions is evidence of this; so also is Ho Tung's

Dr. 1.8. Russell,

Commercial Relations & Exports De¬artment, BOARD OF TRADE,

CONFIDAN

DENTIAL

/remark

CONVI

rer to the Charge at a party last eck. Ho said he had had a mėsage from John Keswick through Y.0. Huang of Jardines aaking whether it sould be convenient for him to pay his post coned visit to Peking in Worch; but he (Ho) hud had to reply that. in the present situation it was really not possible for the C.C.P.I.7. or any other commercial organisation to vive visitors such sa Hr. Keasick the attention they deserved, and that the visit would therefore be best postponed indefinitely.

Sone foreign business aen till obviously succeed in reaching Peking during the coming year, and if they can meet Chinese require- aent, and Chinese price demans, with their products, their chances of doing business will be almost as good as ever. But those who come here for the purpose of "hard selling" or trade promotion whether individually or under the umbrella of exhibitions or trade missions - are unlikely to find it worth while to come to Teking this year even if visas are forthcoming. The trading corporations will have little time for them; and if the factories are really ging to be brought into the revolution, it will be more difficult even than it was during 1966 to make any form of contact with end-

users.

7. This is the picture as it nosears at the moment. One can always hope that the clouds will disperse, but it has not been sensible to count on this during 1,66 (as I am sure the vedish /mbassador would agree),

H I inve written this letter somewhat earlier than I might other- 1.Be have done, in the hope that you will be able to show it to "heo Petere and discuss it with hit before he leaves London to return here. hat I have said above may well affect one or two projecte or proposals which you have been considering with him. as thinking in particular of the proposal for an agricultural exhibition, whien Norman · ebb of

1.C. suggested in a letter to ...a recently was at resent being considered in London with none enthusiasm and urgency. I think and I know that the Churgh (who has seen his letter in draft) agrees - that it would be a

nate of fort to convider asking any proposals to the Chinese for sore northern at Teast either for this or any other exhibition.

r they allowed us to stage one in resent circumstances, it would

a flop burore it started. T o not even think that trade missions to "hina are a starter until the situation returna.a little nearer to nɔmal. e muct be prepared for the time being to accept the 11 ftation: hich the Chinese olitical situation imposes on our activity; to shelve, at least for a few months, any schemes for trade promotion here; and to be content to make the most of our tradin: effort t the Canton Fair and with Chinese missions to London, 23ich 1 here the Chinese trading officials themselves will find it less inconvenient and embarrassing to do business with us.

i copying this letter to Nose in the Foreign Office and Harhan at iong Kong.

vén

First

(A. J. Hunter) ecretary (Commercial)

COMET -KTIAL

(FAB).

FOREIGN OFFICE, S...1.

17 January, 1967.

(PC 6/1/8)

CONFIDENTIAL

Dop

nizli

水

In your despatch No. 4E of 1 February and in Peters' despatch No. 24E of 27 September, 1966, you suggested ways in which we might be able to expand our trade with China. We have drawn upon these despatches to prepare, with the cooperation of the Board of Trade and of Peters himself, a detailed paper on this subject. This has recently been submitted to the Secretary of State and you will be glad to hear that he has fully endorsed the various suggestions on ways in which we might be able to increase our trade which are contained in Part II. I enclose a copy of the paper together with copies of covering submissions by Eddie Bolland and myself.

2. I realise that the present unsettled situation rules out any immediate approach to the Chinese on the Sino-British Trade Council's proposal to publish a technical journal in Chinese or on the suggestion that we should hold an agricultural exhibition in China. I am, however, encouraging the Board of Trade to go ahead with the preliminary consideration of both proposals so that we shall be in a position to sound out the Chinese at fairly short notice when the situation eventually nettles down.

3. I enclose a copy of my letter to Mackahon at the Board of Frade. You will see from this that I have told him that I I doubt whether one of his officials would be able to have any worthwhile talks with the Chinese at the time of the Carton Spring Fair. As things stand it seems from here that it might be advisable to hold this idea over until the Autum

However,

if you nevertheless fcel that we should encourage a Spring visit there may still be time for us to go back to the Board of Trade.

You will have received a copy of the record of John Keswick's call on the Secretary of State.

(A.J. de la Mare)

D.C. Hopson, Esq., C.M.G., D.S.O., M.C., T.D.,

PEKING.

CONFIDENTIAL

31009 22.

NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No.

F26/1/8

DRAFT Letter

To:-

CONFIDENTIAL

Type 1 +

From

Top Secret. Secret.

Confidential DJM

Restricted 12/1

Unclassified

Mr. D. C. Hopson, C.M.G.

D.S.O., M.C., T.D.,

Peking.

Mr. de la Mare

Telephone No. & Ext.

Department

Flag D Flody E

Patus! despatch No

In your despatches Noe. LE of 1 February

245

and of 27 September, 1966, you suggested

ways in which we might be able to expand our

trade with China. We have w drawn upon/

these despatches to prepare, with the

co-operation of the Board of Trade and of

hymns of

Sir Peterà. a detailed paper on this subject.

This has recently been submitted to the

Secretary of State and you will be glad to

hear that he has fully endorsed the various

suggestions on ways in which we might be able

to increase our trade which are contained in

part IX. I enclose a copy of the paper

ворію

together with a-ebpy of Badije Bollandia.

covering submissions

Bi Eddie Bolland mow

mysuf

2. I fully realise that the present

unsettled situation rules out any immediate

approach to the Chinese on the Sino-British

Trade Council's proposal to publish a

technical journal in Chinese or on the

suggestion that we should hold an agricultural

exhibition in China,

however, encourag-

I am,

ing the Board of Trade to ppows ahead with the

preliminary consideration of both proposals so

that we shall be in a position to sound out the

the sillimi Chiness at fairly short notice when things -đô-

eventually settles down.

Ae you know, Je we

werk to allow the present bead of steam on

these ideas to dla down, it would take ages to

Soserruct them.

13.

3. I enclose

enclose a copy of my letter to

MacMahon at the Board of Trade. You will see

from this that I have told him that I k

eeme doubts en whether one of his officials

would be able to have any worthwhile talks with

the Chinese at the time of the Canton Spring

Fair. As things stand it seems from here

that it might be advisable to hold this idea

over until the Autumn. However, if you

nevertheless feel that we should encourage a

Spring visit there may still be time to go

back to the Board of Trade.

You with have reccium

loom of the sewd of

Jorm Resnicho came in the

сти

Sevieren 1 Stark.

17/1

NOTHING TO BE WRITTEN IN THIS MARGIN

(FC 6/1/8)

CONFIDENTIAL

нар

(FLOK A TO

FOREIGN OPPICE, 8.V.1.

17 January 1967.

You will have seen a copy of the paper on Sino-British trade which we recently prepared with your Department's oooperation. I have submitted it to the Foreign Secretary and he has agreed that we may pursue with you the various suggestions contained in Part II (pages 9-13), which sets out ways in which we could increase trade with China.

You can therefore count on our support for the three initiatives which we hope say some to something, namely:-

(1) the Sino-British Trade Council's request for a subsidy from 8.1.G. to enable then to publish a technical journal in Chinese;

(11) the suggestion that a British agricultural

exhibition should be held in China; and

(111) Mr. Hopson's proposal that a Board of

Trade official should visit China to familiarise himself with the day-to-day problems of

trading with the Chinese.

I understand that you are already trying to find the funds which the Sino-British Trade Council require to publish their technical journal, and that John Keswick intends to broach this matter with the Chinese when he eventually obtains perzission to visit China (you will have seen a copy of the record of his talk with Er. Brown). There seems little else that we can do in the neantime.

This is certainly not a good time to ask the Chinese whether they would welcome a British agricultural exhibition. But I imagine that it will take some time to set up such proposal in London and to contact all those who might be

Interested in participating. I therefore hope that it will be possible for us to go ahead with taking preliminary soudings here in the hope that the situation in China will have settled down by the time we are ready to discuss the question with the

/Chinese

4.J. MacMahon, Esq., 0.3., C.E.G.,

Board of Trade,

8.7.1.

CONFIDENTIAL

I see no reason why in more settled conditions the Chinese should not agree to such a proposal. Fere we on the other hand to let the whole scheme lapse because of the uncertainty of tɔe present situation it would no doubt take a good deal of time to resurrect and we might conceivably fall behind other nations who may be working on similar proposals.

5. By the same token, it now looks rather doubtful whether one of your officials would be able to have any worthwhile talks with the Chiness at the time of the Canton Spring Fair. I am consulting Donald Hopson separately on this. Subject to his views, I suggest we might hold this idea over until the Autum Fair.

I am sending a copy of this letter to Donald Hopson.

(A.J. de la Haro)

CONFIDENTIAL

NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No.

FC6/1/2 DRAFT

letter

To:-

Esq..

G.J.MacMahon,/C.B.,

Top Secret. Secret

Confidential.

Restricted.

Uschelled.

C.M.G.

Board of Trade

Type 1 +

From

Mr. de la Mare

Telephone No. & Ext.

Department

Copy to:

D.C.Hopson, Esq., C.M.G., D.S.O.,

M.C., T.D.

Peking

Flag B

Alen

'You will already have received a copy of

the paper on Sino-British trade which we recently

prepared with your Department's co-operation.

I have new submitted this paper to the Foreign

Secretary and I am glad to be able to tell you

that he he agreed that we may pursue with you

the various\suggestions contained in Part IX

(pages 9-13), which sets out ways in which we

could increase trade with China.

You can therefore certainly count on our

support for the three initiatives which we hope

may come to something, namely:-

(1) the Sino-British Trade Council's request

for a subsidy from A.M.G. to enable them to

publish a technical journal in Chinese;

(ii) the suggestion that a British agricultural

exhibition should be held in China; And

(111) Mr. Hopson's proposal that a Board of

Trade official should visit China to famili-

arise himself with the day-to-day problems

of trading with the Chinese.

3. I understand that you are already trying to

find the funds which the Sino-British Trade

Council require to publish their technical

journal, and that John Keswick intende to broach

this matter with the Chinese when he eventually

obtains permission to visit China (you will have

seen a copy of the record of his talk with

Mr. Brown). There seems little else that we

/can

can do in the meantime.

This is certainly not a good time to ask the

Chinese whether they would welcome a British

agricultural exhibition.

But I imagine

that

it will take some time to set up such a proposal

to contact all those who might

in London

be interested in participating.

I therefore

hope that it will be possible for us to go

Spa

ahead with the preliminary arrangements here

in the hope that the situation in Chine will

have settled down by the time we are ready to di

discuss the question with the Chinese.

I see

no reason why in more settled conditions the

Chinese should not agree to such a proposal.

Were we on the other hand to let the whole

scheme lapse because of the uncertainty of the

present situationg it would no doubt take a

good deal of time to resurrect and we might

conceivably fall behing other nations who may

be working on similar proposals.

I hope that

you will therefore fiel able to begin

exploring the idea with the intention of Consulting the Chinese with a suitable

opportunity arises.

5. By the same token, it now looks rather

doubtful whether one of your officials would be

able to have any worthwhile talks with the

Chinese at the time of the Canton Spring Fair.

I am consulting Donald Hopson separately on

this.

Subject to his views we right hold this

idea over until the Autumn Fair.

6. I am sending a copy of this letter to

Donald Hopson.

17/1

NOTHING TO BE WRITTEN IN THIS MARGIN

KRUTHIOTED

Private Secret:ry

Cartached Салка

on Fing B]

CALL ON THE SECRETARY OF STATE BY MA. JU'N KESWICK

ON WEDNESDAY, 11 JANUARY, AD 3.45 F.M.

7. Keswick is Fresident of Me Sho-British Trade Council

and & Director of the importent Hong Kong fin af Jasolans

Katheson.

lived in China for many years before 1949 and

knows & rest deal about Chins.in general as well as bout the

China trade. Besides telking about trade, the Secretary of

State might, therefore, like to rak hin what he thinks of recent

events in Cina.

Sinu-ritish Trade

A detailed paper on Sino-British trade iwa alieady been

Bubritted separ-tely by Er. de la Mere in his minute of 3 January.

ida e'ows thel, although our trade with Cina de s-l1 (exporta

about £25 rillion a year, representing only 0.5% of our total

Jexport truña), there is room for some incrense if British

busingsaren really work hard at promoting trude.

However,

within the foreseeable future, this is unlikely to be

spectacular. The positive steps we could take to increase

our trade with Cins "re sat out in Section IX of the "etailed

paper.

3. Kr. Keavick in well aware of the reasons why the "political

obstacles" to trade no constantly referred to by the C insge

cannot easily be rarovad, and the Sino-British Trade Council

is thoroughly responsible as regarde te application of the

strategic embargo, which is a KATO agreement covering -11

Communiul countrise. The other rain "politic-1 obstacle" to

trede is that there are one pulitionlly Lensitive items

RESTRICT D

Me.x.

RESTRICTED

(e.g. large aircraft) which we are unwilling at the moment to

sull to the Chinese because of American reactions and the

effect that these would have on our trade with the United States.

We try to interpret the enbargo regulations e liberally as

possible and to restrict the export of other goods only when

their sole would lead to a major row with the Aericans.

We have, for instance (es Br. Keswick will know), recently

licensed the export of a fairly advanced computer

503

despite some American pressure not to do so.

the Elliott

Our general political differences with the Chinese do not

seem to have much effect on our trade. In practice the

Chinese tend to separate trude from politica: their trade with

Japan (which has no diplomatic relations with C) inu) is far

greater than with us and that with West Germany (which also has

no diplom tic relations) almost as great. We cannot be sure,

however, if we were to adopt a policy Peking regarded as

a threat to her basic interests (e.g. recognising Formose), the

Chinese would not take action against our trade with them.

5. The Cultural Revolution movement, at present causing so

much turmoil in China, does not ppear to fave affected Chinese

trade policy, although it has certainly had an effect on the way

this policy is carried out. Ministries in China are now so

preoccupied with the pursuit of "bourgeois devils" that they

heve little time for seeing "oreign businessmen. The result of

this is likely to be that our trade with China this year will

be less then last, but the adverse effect of the Cultural

Revolution on our trade rel-tion is unlikely to be pertanent.

BSiland

jaque mich Mr de la Dan u

Proposals in his minuti

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$16.

CONFIDENTIAL

hind Chalfant C 43 (see my note below)

LORD WALSTON O.F. SELL

SECRETARY OF STATE

word

I think myself that the moral of this is that there

will always be an element of political decision in the

allocation by a Communist country of major orders.

Sometimes, something that is wanted can only be obtained

from a particular country, in which case the Communist

orderer has no choice. But where there is a choice,

there will be a marginal element of political manoeuvre

in the sense that a Communist Government may seek either

to please or to give a heavy adverse hint to a particular

Western or non-aligned country, depending on the state

of the international political game.

2. Where there is no such stake in a particular

contract, I agree that the ordinary econom ground

above, I think

modifications apply. Against the abov

that we shall remain up against a particular difficulty

in the light of our relatively intimate relations with

the United States, and also our problems with, e.g. the

more extreme African countries, whom the Chinese will

seek to encourage. But we shall have some advantages,

e.g. when we produce goods that are particularly needed,

though they may tend sometimes to be embarrassing (e.g.

/computers)

CONFIDENTIAL

ลง

our

computers) and there is no excuse for/being slack

about trying.

for/being slack

Plimson

(P. H. Gore-Booth)

5 January. 1967

I agree with Su P. Gue. Booth

the argument that

Shoned be wary

of building up own trade with China

because we may one day lose it again

be carred two fax. So long

the Cocom requirements are #actioch

босон

met

Land Mr de la Mare's paper takes

full account of them) I believe

Sured

ço aboad

af proposed, and

You

should authorice

I recommend that

the Department to act 1 suggested in

paragraph 8 of Me de la Mare's note. Валадарв

CONFIDENTIAL

*/*.

Zagh

CONFIDENTIAL

ival (7)

Permanent Under Secretary

Haj A

TRADE WITH CHINA

I recently asked Far Eastern Department to prepare, in

cooperation with the Board of Trade, an assessment of our

trade with China and its prospects. I now attach their

paper.

2. The Secretary of State has mentioned to me his interest

in the promotion of this trade. He may not wish to read the

paper in full but I would invite his attention to Section IX

Ipages 9-13) which sets out the various things we could do or

are doing.

3. Our exports to China, at roughly £25 million per annum,

represent only 0.5% of our total exports. The question arises

whether the game is worth the candle, and whether in any case

it is wise to try to expand our trade in the face of the

possibility that our political relations with China may

deteriorate.

The

4. Given the theoretical potential, £25 million per annum is

pitifully small, but £25 million is still £25 million.

balance of trade is at present in China's favour her exports

France, Italy,

to us are running at 230 million per annum. But it does not

follow either that the balance will continue in China's favour

or even that she will try to insist on this.

West Germany and Japan all export more to her than they import

from her. Of these only France is in diplomatic relations

with her. China is thus at least to some extent putting into

/practice

CONFIDENTIAL

practice her own dictum that trade is divorced from politics.

The point for us to note is that generally speaking she will

import most from those who provide the goods she wants at the

price she is prepared to pay. As the paper points out,

Japan has the advantage over us in that she can supply more

easily than we can some of the goods which China most needs,

but West Germany has no particular advantage over us in that

respect; yet, although she imports less than we do, her exports

to China exceed ours by almost £4 million a year.

5. There seems therefore to be no fundamental reason why

our exports should not expand if we are prepared to work for

them. But if we assume, as we must, that China may not always

divorce trade from politics if she considers the political

issues sufficiently grave, we must admit that we might be more

vulnerable then some of our competitors.

Though there is no

sign of this at present, political issues involving Hong Kong might arise which could adversely affect our trade with China.

We have too so far been spared having to take a clear-cut

decision on Formosa (at present we merely say that its status is undetermined) but we may before long have to stand up and

be counted. Unless our stand were taken solely on expediency

it would hardly be palatable to Peking. Others, especially

the Japanese, might be faced with the same dilemma, but

although there is no reason to suppose that they would handle

it more skillfully than we, it is possible that we would incur

more Chinese resentment than they. There is no logical reason

for this: it is simply that in that part of the world, as in

/others

CONFIDENTIAL

others, people still derive considerable satisfaction from

venting their indignation on the British.

6. This might be thought to point to the need for our being

cautious in developing our trade with China lest we get stuck

with a larger commercial stake than we would like in the event

of political trouble. But I suggest that this would be an

unnecessarily timid and pessimistic attitude. There is no

reason to take it as axiomatic that our relations with China

must deteriorate.

Indeed they may improve.

Admittedly I

see no prospect of this now, but the course of our relations

over the last year with Indonesia has shown how rapidly and

unexpectedly situations can change, for the better as well as

for the worse. The current internal turmoil in China nay

strengthen the present rigid xenophobic regime in Peking

but it may also weaken it and lead to a movement for greater

accommodation with the rest of the world.

7. One point which is common ground to all of us is that we

should not press our trade with China in cases where to do so

It would adversely affect our trade with the United States. would be madness to jeppardise a good existing market in favour

of what may turn out to be a will-o'-the-wisp. But here again

The Americans will we should not exaggerate our difficulties.

not always react as violently as we sometimes tend to suppose.

When, some ten years ago, we abolished the "differential" (the special COCOM list embargoed for China only, not the

rest of the communist bloo) there were those here who foresaw

But in the most dire results on our relations with the U.S.

for

CONFIDENTIAL

/fact

CONFIDENTIAL

Hy A

ACTION HERE

fact there was no adverse reaction at all and indeed we

were privately congratulated by members of the United States

Administration for having had the courage of our convictions.

More recently the American reaction to our wish to sell a

computor to China has been extremely mild.

Section IX of the paper (pages 9-13) sets out various ways

in which we could increase trade. Taken piecemeal these

suggestions may not appear to amount to much. But taken

together they could amount to something very useful.

would be helpful if the Secretary of State would authorise me

to tell the Board of Trade that we have his sanction for

pursuing these suggestions with them to the full extent of

feasibility.

9. Mr. John Keswick of Matheson and Company is to discuss

the China trade with the Secretary of State on 9 January.

A brief will be submitted at the time, but meanwhile the

Secretary of State might like to see the paper, especially

Section IX.

WA. de la man.

(A.J. de la Mare)

3 January, 1966

Copies to: Mr. Bolland

Head of E.R.D.

CONFIDENTIAL

TELEPHONE.

MANSION HOUSE $555.

TELEGRAPHIC ADORESSEN-

INLAND: MATHESONS TELER LONDON FOREIGN. MATHESONS LONDON-EC 3

TELEX KERVICE 2-2100

with-18

· Matheson & Co. Limited,

3 Lombard Street,

Arefiductial. London, E.C.3

Dear by theur.

22nd December, 1966.

I think I told you that I was planning a trip to China. I have now heard a little bit about the prospects and I enclose a copy of

a letter which I have written to Mr. MacMahon at the Board of Trade, which sets out the position.

The Chinese are rather more open than usual in saying that politics are the key to the situation, so I thought you would be interested.

I have not had the opportunity of discussing China with the Secretary of State and I would like to ask if he could spare me half-an-hour on the subject of China. As you know, I am President of the Sino-British Trade Council and am always anxious to promote exports to China (October £4 million was a record), but, unfortunately, the political considerations often interfere with our efforts.

Tuss. nicerely.

dhuk

John Keswick.

A.J. de la Mare Esq., C.M.G.,

Foreign Office,

Downing Street,

LONDON, S.W.1.

Enclosure

COLADENTIAL

Dear MacMahon,

22nd December, 1966.

CHINA

I had originally intended to make a trip to Peking in October of this year, but the Council for the Promotion of International Trade, in the person of Mr. Hou Ton, sent me a cable suggesting that the time was not entirely convenient and that they would prefer that I postponed it until a date which suited everyone.

A month ago I wrote to Mr. Hou Ton asking if next March or April would be a suitable date for a visit and I followed this up with my own repre- sentative, Y.C. Huang, to call on him to enquire about the position. I now have a message from T.C. Huang, which reads as follows 1-

"Have discussed with 0.0.P.I.T. this morning they have received J.K.'s letter

(*)

they welcone J.K.'s visit but

they are unable to fix the time now because (1) 0.0.P.I.T. and the different foreign trade organisations are very busy until next Spring (stop) To ensure the success of the visit and of the discussions during the visit, it is necessary to have consultations with the senior staff of the foreign trade organisations beforehand (2) The political atmosphere between Great Britain and China has important bearing on the visit and they have to see the condition prevailing next Spring (C) Regarding emall size exhibition, this depends on the time of the exhibition, the types of exhibits to be displayed at the exhibition and the opinions of the foreign trade organisations of the end- users and of the organisations sending visitors to the exhibition (D) Concerning Sino-British trade there is development this year, but the "

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(Message from 1.0. Huang continued)

"future hinges on the changes of the political atmosphere (E) they thank J.K. for the

assistance extended to and arrangement made for the business delegations visiting Great Britain (F) they send their regards to Mrs. Keswick (1) Hou Tung will advise by letter when is the suitable time for J.K.'s visit to Peking.

This answer is neither one thing nor the other, but I thought you would be interested in it, par- ticularly as the Chinese have come out in the open much more than usual, emphasizing that the political atmosphere seems to dominate the picture!

I usually keep the President informed about these sort of problems and should be obliged if you would pass on the message to him and ask if he would spare pe a few moments after the New Year.

As there seems to be a fairly strong political theme running through this situation, I am writing similarly to Arthur de la Mare at the Foreign Office.

Yours sincerely,

(Signed) JOHN KESWICK,

John Keswick.

G.J. MacMahon Esq., 0.B., O.M.G., I.Do.,

Board of Trade,

Commercial Relations and Exports Department, 1 Victoria Street,

LONDON, 8.W.1.

RESTRICTED

Reference

Private Secretary

The attached letter from Mr. John Keswick of Matheson and Co. Limited, who is President of the Sino-British Trade Council, asks whether it would be possible for him to see the Secretary of State to discuss China. Mr. Keswick hopes to visit China in the Spring though presumably because of the political uncertainty there the Chinese have not yet named a date. We think that it would be useful if the Secretary of State could spare the time to see Kr. Keswick some time before the visit. Would it be in order if we replied saying that the Secretary of State was at present extremely busy but would hope to see Mr. Keswick at some time before his visit to China?

2. If this is agreed,we should like to show the Secretary of State a Paper prepared in the Department on Trade with China before Mr. Keswick calls.

John Denson

(J. B. DENSCN) 29 December, 1966

Hi Keswick

пі декой

I han arranged

RESTRICTED

to call at 4.45 a

for

Malay

CONFIDENTIAL

Mr. de la Mare

Flag B

SINO-BRITISH TRADE

The Secretary of State has endorsed the various suggestions

on ways in which we might be able to increase our trade with

China contained in Part II of the detailed paper.

The way

is now open for us to inform the Board of Trade that we have

the Secretary of State's authority to pursue these proposals

Flag C with them (paragraph 8 of your submission of 3 January).

I submit a draft letter to Mr. MacMahon. You will see

I have suggested that, although we should certainly press

ahead in London with our consideration of the various

proposals, the present unsettled situation in China rules out

any immediate discussions on these points with the Chinese.

I also submit a short letter to Mr. Hopson.

E.R.D. concur.

balland

(E. Bolland)

16 January, 1967

Letters to issue.

CONFIDENTIAL

17/1

CONFIDENTIAL

br. e la re

poporo

with G

TRADE WITH CHINA

I attach a paper on our trade with China, prepared in

co-operation with the Board of Trade and the Commercial

Counsellor from our Mission in Peking. It describes China's

current and likely future requirements, our present trade with

her end our future prospects in the market, obstacles to trade

between the two countries and ways in which H.M.G. is already

helping or could in future help to increase such trade.

Present Trade and Prospects

2. As the peper makes clear, Britain's trade with China is not

large and cannot easily nor soon be made much larger. Our total

trade both ways in 1965 was some £54 million; China is our

thirty-fifth largest customer and takes only 0.5% of our exports.

We cannot profit, as do Canada and Australia, from China's vast

grain requirements, nor have we Japan's advantage of geographical

proximity nor her markets for China's primary products.

For her

pert, China has strictly limited end pre-empted amounts of

foreign exchange and she also pursues a policy of not making

herself dependent on a single supplier. Nor does she import

consumer gooda. Nevertheless, there are possibilities for

increased British trade.

China hes now almost fully recovered

from the economic crises of 1959-62 and her economy is steadily

As trade with the Soviet Union continues to fall,

expanding.

an increasingly larger share is left for non-Communist countries.

It is too early to say whether the Cultural Revolution will slow

down China's economic recovery: it may well interrupt it, but

the leadership is aware of this problem and have taken steps to

limit any harmful effects internal political developments may

have on production and trade. The latest figures suggest that

/it is

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it is now possible thot our total trade both ways for this year

ay exceed £60 million.

Tht Can We Do?

3. What then can we do to ensure that Britain obtains the

largest possible share in this trade? As Section VII of the

paper shows, there are some formidable obstacles.

Political Considerations

Leaving oside China's unique relations with the Soviet Union,

political considerations do not seem to have a decisive effect

on China's commercial relations with other countries. Neither

Japan, Test Germany, Canada nor Australia have diplomatic

relations with China, yet their trade exponds rapidly for sound

commercial reasons. On the other hand, France provides China

with valuable diplomatic support and yet she seems to have gained

no clearly identifiable commercial benefit from this. West

Germen exports to Chin greetly exceed those of France. There is

little reason therefore to think that the present relatively

poor state of our political relations with C ina is hering our

trade or that an effort to improve these relations would bring

any aubat ntial commercial return. Thus were we, for example,

to meet China's pre-conditions for putting our relations on a more

friendly footing (i.e. withdrawing our support of United States

policies in Vietnam, recognising China's 'clain to Formosa nd

working more actively to seat her in the United Nations), we

would not thereby necessarily acquire an open sesame to China's

markets. We cannot, however, be cue that if, on the other hand,

we were to adopt a policy regarded by Peking as a threat to her

/basic

CONNI HANTUAL

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basic interests (e... were we to recognise a separate

Government of Formosa or perhaps even pursue a "two Chinas"

policy), the Chinese would not seek to "punish." us by cutting

back the imports of British goods or denying us a particularly

valuable contract.

Obstacles to Increased Trade

5. As for the obstacles to our trade set out in Section VII,

there seems to be little we can do at present to overcome them.

The following present the most difficulty:

(a) The Strategic Enbarzo: In CCCOM, in which decisions heve

to be unanimous, the Americans would not at present agrea

to any relaxetion of the strategic embargo es applied to

Cina. They might be willing to agree to some

relaxations of the embargo for destinations in Eastern

Europe at the next CGCOM List Review due at the end of

1967. It seems at present unlikely that they would

agree to relaxations on he scale we would consider

justified unless some provisions overt or covert were

made for rataining control for destinations in Cì ina,

i.e. some form of Ching differential were re-introduced.

But we have consistently opposed separate treatment of

China in the past and should, we think, continue to do so.

(b) Non-embargoed but Sensitive Gouda: While the Vietnam war

continues, the Americans will press us not to sell to

the Chinese even non-embargoed products (such na civil

aircraft) which would add to Peking's military potential.

They will certainly also do their best to ensure that

United

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United States component parts or parts involving United

States "know-how" do not find their way to China

incorporated in British goods. There will also be

opposition from India to the sale of aircraft to China.

As far as aircraft are concerned, this problem is nt

present under r-view by the Departments concerned and it

is hoped that we sell be nhle to give the ircraft

industry guidance on the types of aircraft which may be

exported to China:

Board of Trade to single out China for more liberal import

quotas. Other countries would soon hear of this and

would press us in their turn for similar concessions.

Irmediate Action

They

6. The positive atepe we could like to increase our trade with

China are set out in Section IX of the attached paper.

are not at all framatic and mostly involve strengthening "nd

improving existing facilities. There are, however, at least

three useful initintives which I think we can support:

(a) the Sino-British Trade Council's proposal to publish

a technical journal in Chinese for distribution to

Chinese trade officials •nd specialists. This proposal

is now being studied by the Board of Trade and may well

require - subsidy from H.H.G. of £2,000 in the first year

and 21,200 a year thereafter. (paragraph 17(c));

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/(8)

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? Mi Mulley

(b)

(c)

our Mission's suggestion that a British: agricultural

exhibition should be held in Chine (peragraph 17(a)).

Kr. John Keswick hes alieady promised to camp, ign

actively for this if H.M.G. agree to support it. Lord

Walston might like to discuss this suggestion with

a Minister in the Board of Trade;

our Mission's recommendation that a Board of Trade official

should visit China to far ilierise himself with the day-to-

day problems of trading with the Chinese (peragraph 17(e)).

The officiel could conveniently visit Cine at the time

of the Canton Feir next spring.

I should so note that our prevent Cor mercial Counsellor in

Mr Peters

Peking is now visiting a number of British firms and Chambers of

Commerce to discuss with them, nd deliver lectures on, our trade

with Chine. A highlight was Mr.

Peters' talk to over 200

representativee of the China trade at the Confederation of British

Industries' headquarters in London on 17 November.

Reducing Chine's Isolution

7. The justification for doing what we can to increase our

trade with China is of course primarily commercial.

There is

lao, Lowever, a political factor to bear in mind. It was agreed

in the Steerin. Committee paper dealing ith possible measures to

break down Chinese isolation that trade was one of the very few

ways in which Britain could help to bring China more into contact

with the Western world. The visits of British businesmen to

China "nd of Cinese trade officials to Britain right eventually

/contribute

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CONSINM.TIAL

contribute to lessening the present extremism of Chinese policies.

We should therefore, the paper concluded, do everything we could

This is clearly not a factor

to encourage such trade contacts.

of immediate consequence, but it does provide another reason for

increasing our efforts to promote Chinese trade.

Economic Relations Departrent concur.

Copy to br. Mason, E.R.D.

Bolland

(E. Bollend)

19 December, 1966

Suntrusion to P.US.

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3/1

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TRADE WITH CHINA

China's present trade (peragraphs 1-2)

With Britain (paragraph 1)

In general (paragraph 2)

China's current requirements (paragraph 3)

RECEIVED IN

ARCHIVES No.317

1 8 JAN 1967

FCG/1

II.

III.

British Exports to China (paragraph 4)

IV.

VI.

VII.

Future trends (paragraphs 5-6)

Prospects for British Trade (paragraphs 7-8)

Credit (paragraph 9)

Hindrances to Trade (paragraphs 10-14)

Strategic Embargo (the COCOM list paragraph 10)

British quota restrictions (paragraph 11)

Political difficulties (paragraph 12)

United States components and "know-how"

(paragraph 13)

The Travel Notification System (paragraph 14)

VIII. Trade Promotion (paragraphs 15-16)

IX.

British Organisations (paragraph 15)

(a) The Sino-British Trade Council

(b) The "48 Group".

The Mission in Peking (paragraph 16)

Ways in which Her Majesty's Governmcnt could help increrse Trade (peragraph 17)

(a) British exhibitions in China

(b) Red carpet treatment for Chinese purchasing missions

(a) Visits by Commercial Officers to firms in Britain (e) Visits by Board of Trade officials to China

(f) Educating British businessmen

(g) Training Chinese technicians in the United Kingdom

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/(h)

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Appendix A:

(h) Chinese exhibitions in the United Kingdom.

Chinese foreign trade with the U.S.S.R., the rest of the bloc and with non-bloc countries 1960-65.

Chinese trade with Britain, Japan, France and West

Germany, 1960-65.

Appendix B:

Appendix C:

Chinese trade with selected countries by

commodities, 1964 and 1965.

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TRADE WITH CHINA

CHINA'S PRESENT TRADE

British exports to China in 1965 amounted to £24.8 million

and total trade both ways to £54.5 million.

For the first ten

months of 1966, British exports amounted to nearly £26 million

a better annual rate than

and total trade to £54.6 million 1965. Both sets of figures represent a considerable improvement over 1964. China is our 35th largest customer, taking 0.5%

It is unlikely that this position will

of our total exports.

alter substantially in the coming decade.

In recent years the most significant change in China's trading pattern has been the decline in trade with the Soviet Union and with the Soviet bloc as a whole.

During the

fifties, over two-thirds of China's trade was with the bloc,

now the figure is less than one-third (see Appendix A). Although Britain has shared in the general increase of trade with China, the improvement in our trade has been slow.

China's

trade with Japan has increased at a far greater rate and in

1965, although we remained the largest Western European importer of Chinese goods, our exports to China were overtaken by those of West Germany (see Appendix B).

II. CHINA'S CURRENT REQUIREMENTS

3. Since 1961, China has been buying an average of 5a million Even if China's harvests continue to tons of grain per year. improve, they are not likely to do more than keep pace with her increasing population and purchases on this scale are likely to continue. It is estimated that China will spend £600-700

million on grain during the next five years.

Britain cannot

share in this trade except in the chartering of ships.

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/Although

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Although the Chinese have purchased substantial quantities of certain raw metals on the London metal market (and will probably continue to do so if the prices are right), we can only share indirectly in the increased Chinese demand for raw

Chemical fertilizer, for which there is a great

materiels. demand, is being supplied largely by Japan, although I.C.I. is trying to break into the market. We are more likely to benefit from the Chinese desire to import metal products, engineering goods, scientific instruments and complete plant, although it is likely that some of the plants which the Chinese "re now purchasing will be used as pilot projects which the Chinese can

The Chinese are also increasingly trying to buy "know-how" (plus a minimum of essential equipment) rather than

They do not import consumer goods. complete capital projects.

then copy

III. BRITISH EXPORTS TO CHINA

4. The table at Appendix C gives the main categories of

The main exports British exports to China during 1964 and 1965. were machinery of all kinds, non-ferrous metals, iron and steel, scientific goods, textiles and chemicals.

Our best chances

of exporting are likely to remain in these fields.

IV.

FUTURE TRENDS

Future trends in Chinese foreign trade are very difficult to foresee. It is too early yet to determine what effecta the Cultural Revolution will have on China's economy end commerce. The slowing down in foreign trade negotiations in recent montha may well be one of the first results of the disturbances caused by the Cultural Revolution.

Production,

and hence export earnings capacity, may also have suffered for

/the same

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the same reason.

Care has, however, been taken to limit the

repercussions of these political developments on the economy and any such setback to Chinese trade and production need only be

short lived.

There is little firm information available about China's economy and the Third Five Year Plan which is due to begin this year. It seems, however, that realistic policies are being followed, such as giving priority to agriculture and not again getting involved in another "Great Leap Forward" similar to that of 1958 with its disastrous dissipation of China's limited resources. If these policies are continued, China's economy should show a general improvement without the great peaks and troughs of the "Great Leap Forward" and her foreign trade is likely to keep pace. However the improvement is not likely to be rapid and for many years to come the stability and growth of China's economy will continue to depend on a sound agricultural base. One year of bad harvests could at any time cause a major setback. The consequent diversion of foreign exchange to the purchase of foodstuffs from overseas would necessarily have an impact on China's importa of industriel and other goods.

PROSPECTS FOR BRITISH TRADE

Since the decline of China's trade with the Soviet Union it has become clear that she no longer wishes to be dependent upon any one country and she will therefore strive as far as possible to maintain a reasonable balance between her foreign suppliers. Within this limit, to what extent the British can share in Chinese trade will depend very largely on the capacity of our manufacturers to produce goods of the right

generally

/the highest

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the highest

quality at competitive prices and to deliver them on time. The Chinese are shrewd commercial negotiators and carcfully assess alternative sources of supply before placing large contracts. They are unlikely to allow the recent strains in Anglo-Chinese relations to affect the purchasing policy of their trading corporations. Their main concern is with the

price and technical qualities of the product in question and reliability of delivery. Although at present our exporters have the advantage of a complete absence of United States competition, it will not be easy to maintain our prosent share of the market, let alone to increase it. The Japanese, by virtue of geography, past trade links and the fact that they are very large purchasers of primary products from China, have many advantages, and our European rivals are all striving to increase their own

shares of the market.

Although it does not seem that China tries to balance her books with each individual country exactly, the level of our exports will to some extent depend on how much we are prepared to buy. This could become a problem for all China's Western suppliers. There is a steady demand for Chinese agricultural and mineral products but hardly any for her industrial goods: noither quality nor sales technique boing as yet up to Western requirements. The Chinese might, however, be able to increase their exports of consumer goods to a significant extent. in general, while the bulk of her exports consist of agricultural products and there remain only limited surpluses available for exporting to the West, then there will be

a similar limit to her capacity to import.

But,

Even if China ever

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/hea

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has a large surplus for export, Western agricultural

protectionism would probably impose a limit to the amount sales

can be expanded.

VI.

CREDIT

E.C.G.D.

The Chinese record of payments is excellent. cover is available for China without any special limitations. Financial Guarantees for long-term credit re in principle available, but have never been asked for.

Even where five-year

credit terms have been agreed (e.g. for the sale of six Viscount aircraft) payment has been completed before the end of the five

year term.

VII

HINDRANCES TO TRADE

10. Strategic Embargo Together with other NATO countries and Japan, Britain embargoss the sale to China (and the Soviet bloc) of all gooda and equipment regarded as strategic (the

COCOM list).

China frequently complains about the existence of the embargo and enquiries are often made about buying items on the list. There can be no doubt that the cmbargo prevents China from buying Western equipment which would help with her nuclear and military programme. It may also prevent the purchase of equipment which is genuinely intended for civil use, although the amount of trade prevented in this way may not be as great as the Chinese claim.

China firmly believes that the

COCCM list is applied with more stringency to her than to the Soviet bloc, but this is not altogether true,

There used to be

a "Chine Differential", but it was abolished in 1957 at our insistence and, despite recent American pressure for its revival in a modified form, COCOM does not discriminate between China

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/and

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and Eastern Europe.

Nevertheless, exception cases are less

likely to receive COCOM approval for destinations in China than similar ones for Eastern Europe, because United States concurrence is needed. In cases when H.M.G. havo discretion to authorise administrative exceptions to the embargo, it is often harder to satisfy conditions about end-use in China than it is for

It is Eastern Europe; this is notably true of computers.

The cotton

sometimes alleged that our own conscientious application of the COCOM rules diverts Chinese orders to other countries which apply them less rigorously, but there is no conclusive proof of this. 11. British Quota Restrictions About 80% of British imports from China consist of such things as sheep and lambs wool, animal hair, bristle, soya beans and various oils (see Appendix C). All these goods are freely licensed up to the full value requested. Other goods are subject to quota restrictions. textile quota (which is imposed as part of a world-wide scheme of control) probably prevents some Chinese imports, but Board of Trade policy on other products is to be as liberal as possible and the quotas are in general more of an irritant than a serious impediment to trade. Despite this, the Chinese consider all quotas "illegal" and have refused to negotiate about them. 12. Political Difficulties The export of almost all "sensitive" goods falls within the scope of the COCOM embargo. There are, however, some items which do not appear on this list, Aircraft but the export of which causes particular difficulty.

are the prime oxample. Earlier this year there was a fair possibility that the Chinese would order a number of Trident aircraft from Hawker Siddeley. Despite the obvious attractions

/of this

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of this deal, Ministers decided that at the moment such a sale would cause unacceptable repercussions on our economic and political relations with the United States and our political relations with India. While the Vietnam war remains at its present intensity and American backing remains so important for sterling, similar arguments are likely to be used to prevent the

The disadvantage sale to China of other such sensitive items.

of such a unilateral embargo is that we leave the way open to our competitors who are less dependent on American support; France

in particular.

It is unlikely that much can be done to improve

this general situation at the moment. We are et present, however, engaged in an inter-Departmental review of our whole policy on exporting aircraft to China, as a result of which it is hoped to give the aircraft industry guidance on the types of aircraft which may be exported to China and those which may not. Our general policy is to ensure that embargoes should be as limited as possible but applied equally by all COCOM countries. 13. United States Component Parts and "Know-how" trade controls prohibit the export to China of any United States' goods. Many British products of advanced design incorporate American component parts or "know-how". Some firms without important

trading

connections in the United States export these items and

risk the consequences of American displeasure.

United States

Most firms,

however, are forced to find alternative components or not to trade

There is no prospect of a change in the American

with Chine.

attitude in this matter in the near future.

The Chinese

attribute the difficulties over exporting products incorporating United States "know-how" to the direct intervention of Her

Majesty's Government, and often complain about "such artificial

barriers to trade".

/14.

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The Chinese Mission in

London periodically complain about this system which requires all Chincse who have been in the United Kingdom for longer than

14. The Travel Notification Schome

three months to give the Foreign Office 48 hours' notice of any plans to travel outside London. In practice, permission is very rarely refused and the system is much less restrictive than the stringent travel regulations imposed upon foreigners in Peking. We have told the Chinese that we would willingly abandon our

system if they will reciprocate.

VIII. TRADE PROMOTION

15. There are two British organisations whose objective is to

promote trade with China:

(a) The Sino-British Trade Council.

The S.B.T.C., which was

set up in 1954, is sponsored by the Association of British Chambers of Commerce, the China Association, the Confederation of British Industries and the London Chamber of Commerce. It is given full support by Her Majesty's Government and financial backing of £13,250 a year at present. The President is Mr. John Keswick, one of the senior directors of Jardine Matheson and

Company.

After a slow start, the S.B.T.C. is now doing valuable work. It produces a monthly bulletin and its two

full-time officers are now each making visits to China

about once a year.

(b) The "48 Group". This is a group, originally of 48

companies, set up in 1952.

Several respectable and

powerful firms are members (e.g. Massey-Ferguson), but the Consultant to the Group, Mr. Berger, is closely connected with the British Council for the Promotion of

/International

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Flag A

Flea B

International Trade, a Communist front organisation.

Her Majesty's Government strongly disapprove of and refuse to recognise either the B.C.P.I.T. or the "48 Group". Through efficient organisation, the favour of

the Chinese authorities and assiduous attention to Chinese contacts, the "48 Group" had much success in its early years. Recently, however, the S.B.T.C. (with the support of Her Majesty's Government) has shown that it can provide comparable trading services without the political overtones. Some members of the "48 Group" who dislike

its political colour have now left the organisation.

The Commercial Section of the

16. The Mission in Peking.

Mission has recently been upgraded and is now staffed by

a Counsellor and a First/Second Secretary. With ell trade in

China under State control, the Commercial Section is an

indispensable link with the Chinese Trading Corporations and does valuable work. While trade remains roughly at its present level

there is no need to increase the number of the staff.

IX.

17.

WAYS IN WHICH HER MAJESTY'S GOVERNMENT COULD HELP TO INCREASE TRADE

In two recent despatches (FC 1151/6 of 1 February and FC 1151/45 of 27 September) our Mission in Peking have made

a number of suggestions about how Her Majesty's Government night help to promote trade with China.

(a)

These were as follows:

British Exhibitions in China. We should concentrate on

small specialised exhibitions in the near future and

Her Majesty's Government should give financial

assistance to firms or groups of firms which intend to

/organise

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CONFILENT IAL

10.

organise this type of exhibition.

The Board of Trade

agreed with this idea and there is no difficulty about

a limited amount of financial assistance.

The recent exhibition in Tientsin organised by the

Scientific Instrument Manufacturera' Association, held

at the height of the Cultural Revolution, was as

successful es could have been expected in the

circumstances.

The fact that the Chinese allowed it to

take place at such a time is e token of the importance which they place on such exhibitions.

S.I.M.A. are

hoping to organise a similar exhibition in 1969. present no other British exhibition is contemplated, our Mission in Peking have suggested that the Chinese would undoubtedly be interested in an exhibition of agricultural machinery and advanced agricultural techniques. The Board of Trade are considering this proposal. Mr. Peters will be meeting members of the Agricultural Engineers Association Limited and will

discuss this idea with them.

but

(b) Red Carpet treatment for Chinese Purchasing Missions Mr. Hopson said that good treatment for the Chinese purchasing missions to this country would pay dividends and that the Board of Trade were already doing a very good job. He did not suggest any improvements, but he emphasised the necessity of keeping up a high standard of interest and hospitality. The main problem is that the Chinese generally give very little warning about the arrival date or composition of their delegations.

/(c)

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11.

SINO - BRITISH TRADE COUNCIL

The Board of Trade agreed with

Mr. Hopson that we should do everything possible to encourage

the activities of the S.B.T.C. In fact, Her Majesty's

Government already give financial backing to the extent of £13,250 per year (see paragraph 15(a)). Members of the Board of Trade and Far Eastern Department now attend

meetings of the S.B.T.C. as observers.

The S.B.T.C. have recently requested a subsidy from Her

Majesty's Government to enable them to publish a technical journal in Chinese. This journal would be distributed to Chinese trade officials, engineers, technicians, scientists and teachers. It would contain no general editorial text

and would concentrate on technical developments in the United

Kingdom. This is a good suggestion and we are at present

} examining the details with the Board of Trade to see whether the financial support which the S.B.T.C. require (£2,000 in the first year and £1,200 per annum thereafter) can be found. (d) Visits by Commercial Officers to firms in Britain

It has

been agreed by both the Board of Trade and the Foreign

Office that particular care should be taken over the arrangements which are made for our Commercial Officers in

Peking, while on leave, to visit British firms and discuss

with them trade with China. There is no difficulty about

making arrangements for visits of this type, which are, in fact, undertaken by the majority of our trade represent-

atives in overseas countries when they are home in the

United Kingdom. The Commercial Counsellor from Peking is undertaking such a programme during November and December, He will visit at least thirty firms and will be addressing

several Chambers of Commerce.

/He

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12.

He will visit Scotland where he will follow up

a programme initiated by the S.B.T.C.

The Board of

Trade also hope to stimulate interest in Sino-British

trade in Northern Ireland.

(e) Visits by Board of Trade Officials to China

Mr. Hopson

suggested that it would be useful for Board of Trade officials to visit China and meet their opposite numbers.

We agree.

Such visits would help Board of Trade

officials to appreciate the day-to-day problems of

trading with China and to assist British businessmen

in their dealings with the Chinese.

(f) Educating British Businesamen It is generally agreed

by Peking, the Board of Trade and ourselves that we

should do everything possible to educate British businessmen new to the China trade in the problems and

It is possibilities of trading with that country. becoming increasingly important that our businessmen

should take more trouble to brief themselves about

China and learn at least a smattering of her language.

(g) Training Chinese technicians in the United Kingdom

aro considering with the Board of Trade how to encourage more British firms to run training courses in

the United Kingdom for Chinese technicians in

connection with the sales of British equipment.

have, however, to bear in mind the need for security and the obligation to COCCM to protect "know-how" that would enable the Chinese to make embargced goods.

/(h)

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13.

(h) Chinese exhibitions in Britain It was suggested that

the Board of Trade should encourage and try to make

arrangements for the Chinese to hold small exhibitiona

in this country. We think these would be useful in

demonstrating British interest in encouraging trade

between the two countries. The Board of Trade have,

however, pointed out that embarrassment might be caused

if, on receipt of such an invitation, the Chinese

decided to exhibit products which are on the quote list

and then demanded an increase in their quotas which

could not be extended. This factor would certainly

have to be weighed in the balance before any decision

to encourage the Chinese to exhibit here was taken.

CONFIDENTIAL

CHINESE FOREIGN TRADE 1959-65

(£ million)

Appendix A

1959

1960

1961 1962 1963

1964

1965

U.S.S.R.

734

595

328

268 214

161

149

Rest of Bloc

(net Cuba)

341 335

273

251

240

225

253

Non-Bloc

467 480

439

423

527

708

918

Total trade 1,542 1,410 1,040

942

981 1,094 1,320

Source: U.S. estimates

CHI

Appendix B

DE SELECTED COUNTRIES

1960-65

(£ million)

1960

1961

1962

1963

1964

1965

Britain

56.8

43.9

31.8

31.9

42.4

54.5

Japan

8.4

17.0

30.2

48.9 110.9

167.8

France

27.0

18.7

21.6

28.4

28.7

37.1

W. Germany

61.8

25.2 25.1

20.0

27.6

54.2

Appendix C

CHINESE TRADE WITH SELECTED COUNTRIES

1964

£'000s

Imports from China

U.K.

France Italy W.Germany Japan

TOTAL

of which:-

24,629 11,009 8,503 *18,480

56,790

Food and live animals

1,821

340

633

2,089

13,603

Hides en aking

963

841

1,876

2,451

344

Oil seeds, nuts and kernels

1,827

185

965

2,254

11,948

Textile fibres

6,489

2,423

2,998

1,662

1,665

Metalifercus ores

354

249

225

906

Animal and vegetable oils

and fats

579

313

653

Chemicals

1,294

963

343

1,040

1,309

Leather

554

577

126

Textile yarns

4,473

698

548

563

207

Non-ferrous metals

Miscellaneous manufactured

580 2,298

399

1,699

1,735

655

520

250

164

1,005

[

16,251

articles

Pig Iron

Export to China

TOTAL

17,733 17,714 6,611 9,094

54,986

of which:-

Wheat/Barley

9,657

Textile fibres

2,472

419

961

6,711

Chemical olements and

compunds

566

452 1,072

1,170

13,916

Dyeing, tanning and

colouring materials

268

265

1,229

Fertilizers

319

114

6,614

Plastic materials

136

326

270

555

Chemical materials and

product n.e.s.

682

129

186

693

516

Textile yarns, fabrica

1,545

721

2,792

454

3,232

Iron and steel

2,843 2,297

198

922

12,656

Non-ferrous metals

1,051

719

537

131

Machinery other than

electric

2,769

618

233

1,412

5,392

Electrical machinery

1,733

302

168

454

1,403

Transport equipment

1,831

177

1,333

105

Scientific goods, etc.

1,200

111

265

1,093

Miscellaneous manufactured

articles

105

194

Source: O.E.C.D. Scries 'C' 1963 and 1964.

Appendix C (contd.)

CHINESE TRADE WITH SELECTED COUNTRIES

1965

£'000s

Imports from China

U.K.

France Italy W.Germany

Japan

TOTAL

29,720 15,602 13,717 25,965

80,251

of which:-

Food and live animals

4,378

759 1,310

3.536

28,993

Hidca and Crins

1,167

727 2,647

3,499

558

Oil seeds, nuts and kernels 1,070

463 2,226

2,267

18,684

Textile fibres

7.115

2,983 4,579

1,998

3,421

Metalliferous ores

1,266

777

982

1,254

Animal and vegetable oils

end fats

2,071

121

755

615

Chemicals

1,828

1,669

1,074

1,571

2,130

Leather

664

816

227

177

Textile yarns

3,294

870

412

639

396

Non-ferrous metals

595

3,114

235

1,088

2,485

Miscellaneous manufactured

articles

756

716 327

353

2,250

Pig iron

8,646

Exports to China

TOTAL

24,874 21,456 20,148

28,198

87,512

of which

Wheat/Barley

225

Textile fibres

932

752 1,320

5,277

Chemical elements and

compounds

1,003

952 4,427

1,426

17,407

Dyeing, tanning and

colourin materials

501

616

910

170

Fertilizers

632

2,491

4,377

785

12,005

Plastic Loterials

152

267

122

242

1,843

Chemical reterials and

products n.e.s.

652

105

879

2,231

1,334

Textile yarns, febrics

1,540

1,562

2,080

238

4.563

Iron and steel

2,208 4,966

2,698

4,351

16,595

Non-ferrous metala

5,036

2,776

113

9,263

477

Machinery other than elect

electric

5.950

2,708

2,463

5,569

16,274

Electrical machinery

2,569

869

356

1,430

4,701

Transport equipment

1,116

2,208

191

252

1,102

Scientific goods, etc.

1,894

253

356

838

2,405

Miscellaneous manufactured

articles

102

136

464

362

Source: O.E.C.D. Series 'C' 1965, Imports and Exporta.

Symbol:

- Nil or negligible.

RESTRICTED

Keeting between the Secretary of State

RECEIVED IN ARCHIVES No. 31

for Foreign Affaire and Mr. John Keswick

17 JAN1967

FC6/1

of Matheson & Co., at 4 p.m. on 11 January 1967

at the Foreign Office

Present: Mr. de la Mare

Mr. Keswick, who was calling at his request, reviewed

the structure and activities of the Sino-British Trade Council,

which was linked with the British National Export Council.

We had in this country the machinery to increase our trade

with China: it was the political attitude of the Chinese

towards us which prevented any great increase.

2. United Kingdom trade with China was continuing in a

small and undramatic way. Our exports for last October, at

£4 million, were the highest ever. But the trade was almost

entirely in small routine lines: no big contracts were on

hand or in sight.

3. Mr. Brown asked why the Japanese and the Germans were

doing better than the United Kingdom.

Japan had two advantages:

Mr. Keswick said that

she was geographically on China's

doorstep and she was willing to take what China had to export.

The Germans enjoyed the advantage of having no political

commitments

Mr. Brown

the Chinese had no ground for saying that the

German Government was against them, whereas they were always

complaining that the British Government was. intervened to say that Her Majesty's Government had taken no

Mr. Keswick action or made any statements hostile to China.

agreed, but the Chinese continually complained about the

RESTRICTED

/United

RESTRIJE.D

They

One was that

United Kingdom press and the B.B.C. which they always insisted

were Government-controlled. There was a certain amount of

tail-twisting in all this. The Chinese were angered at our

close connexion with the United States and used this as an

excuse to claim that Britain was unfriendly to them.

did however make specific complaints against us.

it was we who kept the Cocom restrictions going - They knew

that these restrictions existed at the insistence of the

Americans but they said that whereas other countries were

liberal in their interpretation the United Kingdom followed

the rules far too strictly. In his conversations with his

Chinese friends Mr. Keswick took the view that in the same way

as they themselves felt bound to honour a commitment once they

had accepted it we were bound to follow rules to which we had

agreed. The Chinese retort however was that the commitments

they entered into were honourable whereas the Cocom agreements

were not.

4. Mr. Brown asked Mr. Keswick what he would consider a

desirable outcome of the present disturbances in China.

Mr. Keswick thought that the most desirable outcome would be

that Chou En-lai and Chen Yi, who were moderates, good

administrators and aware that economic development required

political stability, should emerge, first as the ring holders

and later perhaps as the holders of power. He agreed that it

seemed doubtful whether, if Mao disappeared from the scene,

Lin Piao would be able to retain control.

Mr. Brown asked whether Mr. Keswick thought that recent

RESTRICTED

/events

RESTAICHED

events in China had eased the pressure on India. Mr. Keswick

replied that it undoubtedly had and said that this was of

particular interest to him because he hoped that this would

reduce India's opposition to the sale of British aircraft to

China. He thought we should make a real effort to sell the

BAC 111 (which he described as "really an extension of the

Viscount"). Kr. Brown commented that he had just been looking

through the list of British aircraft which might be considered

for sale to China; he thought it very difficult to put one's

hand on one's heart and say that there was any which would not

increase China's military potential.

6. Mr. Keswick made it clear that he was not suggesting any

change in United Kingdom policy towards China which he

thought was right. If however developments in China should

make it possible for the two countries to get closer politically

he felt confident that this would be reflected in the volume of

trade.

RESTRICTED

12/1

Sino-British Trade

Trade Council

中英贸易协会

President: Mr. John Keswick C.M.G.

RECEIVED IN ARCHIVES No.31

1 2 JAN 1967

FC6/1

The Association of Brink Chamber of Commerce

The Chan Assocation.

The Confederation of British Industry

The London Chamber of Commerce

Our ref: PSM/VR.

21 Tothill Street, London S.W.] Whitehall 6711

To Members of the Executive Council.

13th January 1967.

Dear

вит того,

are as follows:

Exports to China

December £3,038,494

Provisional figures for December and for the year

231-905 Jan/Dec 65

£31. M

Jan/Dec 66 Jan/Dec 65

Increase

£24. 9 M

28.12

Imports from China

2,184,103

33. 8

#29. 7 M

13.8%

Total

£65. 7 X

£54. 6 M

20.3%

Nr. or

M. Bolly

Enter

મ.

A very healing

1965. We

maintain

اد

rets

ملح

well

evon to

Yours sincerely,

1967.

DOM 16/1

N.F. Webb Secretary-General

SB Sino - British Trade

中英贸易协会

RECEIVED IN

Council ARCHIVES No. 31 Council

President: Mr. John Keswick C.M.

13 JAN 1967

Feb/l

The Association of British Chamber of Commerce

The China Association

The London Chamber of Commerce

The Confederasion of British Industry

Our ref: NFW/VR.

Members of the Executive Council.

De ar

the moss.

21 Tothill Street, London S.W.1 Whitehall 6711

12th January 1967.

Lunch for Chinese

Please refer to Item VI of the minutes of the meeting

of the Executive Council held on the 3rd January.

This is being arranged for 12.45 p.m. on Tuesday the 14th February at the Connaught Rooms, Great Queen Street, W.c.2.

Mr. Huang Wen-chun and five of his colleagues have accepted our invitation and we are also asking Mr W. T. Wang of the Bank of China and some of his staff.

attend.

Will you please let me know if you will be able to

Ruth

Enter

Bu.

nom dome

accapt

TOOM 13/1

13 February

DOM 13/1

Yours sincerely,

N.F. Webb Secretary-General

Chmme

Humy

MR. Moss

F.O.

中國

SB TC

英

Sino-British Trade Council

貿

With Compliments

易

协

会

21 Tothill Street, London, S.W.1

Telephone: WHItehall 6711

Enter ad

卜

M12/1

Memorandum

from P.5. Marshall

11.1.67.

Heeting with lir. Huang Wen-chun 11th January 1967

UGEVIDENTIAL

RECEIVED IN ARCHIVES No. 31

13 JAN 1967

FCG||

At the

General En route to the Commercial Office I noticed that the shutters at the Office of the Chargé d'Af: aires were still closed, as on my previous visit there. Commercial Office, however, shutters which on an earlier visit also had been closed, were now open and much of the gloom had disappeared.

Two blue-uniformed females now staff the desk in the entrance hall where previously there was one. Furn- ishings remain reduced to the simple minimum installed in December. The drinks cabinet is still absent, and on this occasion, no tea was served. Cigarettes were offered.

Huang Wen-chun came in smiling, and seemed confident. No colleague accompanied him. He closed the door.

الها

(1)

Huang passed to me the two invitation cards delivered to the Chargé d'Affaires on January 2nd, and to Huang'a office on January 5th. As I was aware, he said, the Charge was now in China, and could not attend. However, he and five other senior colleagues would attend. Mr. Li Wen-chun was typing a list of named for me to take with me. Would I please issue a separate invitation to each man.

I agreed and asked if I should also invite colleagues from the Chargé's Office, Mr. Shen Ping, Kr. Ma Chia Chun ?

No, they were busy and it would be best to limit invit- ations to the Commercial Office and the Bank of China.

Agreed.

(2)

I showed him a letter from Ripley of Longworth Instru- ments Ltd, The company had exhibited with 8.I.K.A. in 1966, and had sold anaesthetic equipment. They had a wide range of special equipment, they wished to demonstrate to Huang and his colleagues. Would he visit their laboratories with me in January or February?

Huang accepted without hesitation. We would make it in February, and he would transmit a suitable date and names of the party through me. He assumed I should be free to accompany them in February?

Agreed.

Cont'd....

Ꮀ

Would I please also send him a photocopy of Ripley's letter for his file. Incidentally, was Ripley's factory more than 35 miles away?

I promised to check the distance and said I anticipated no difficulty in obtaining Foreign Office permission if necessary for us to travel there. Incidentally, I believed that an invit- ation would soon be forthcoming from a company in Lancashire would he be free to go so far? It was an electronics factory.

He promised to consider a visit when he had studied

(Not yet sent).

the firm's catalogue.

(3)

I said we had heard from the Board of Trade that Mr Liu Ping of CCPIT would be here on holiday from Chile. We would wish to entertain him or his wife on a suitable occasion.

staying,

Huang looked absolutely blank.

I repcated it all and asked if he knew where they were

or possibly it would be better for us to send an

invitation through his office?

Ah yes, he had heard about the visit, but Mr Liu was merely a representative of CCPIT.

Nevertheless, I thought we should offer to entertain him as a courtesy, and would send an invitation in due course via Huang,

At this point, Li Wen-chun brought in the list of acceptances for our lunch party, (list attached), and remained with us thereafter.

(4)

matters.

Huang then said he wished to enlist our help in two

(a) I would know about China's desire to purchase an acrylonitrile plant from Prinex. A Techimport team had been discussing design specifications with the company for a month, and with one exception, all points had been settled satisfactorily. The exception concerned the Spinning Speed.

The specification put forward by Prinex stipulated a spinning speed in excess of Chinese requirements. At that speed, raw material requirements were excessive, and it was inevitable that there would be a certain amount of wastage.. Operation at such a speed could pose economic problems for China. This point of view had now been put to Sir Frank Kearton, and Prinex, for their part, had offered an alternative, slower-operating package. However, this necessitated the purchase of additional equipment, at an increased cost to China.

This seriously affected economic plans, and it was up to Huang and his colleagues to find an acceptable solution. Could I please ensure that Prinex realised that this was a basic problem for the Chinese negotiating side, and urge them to cooperate fully

in finding a solution.

Agreed.

(b) The second matter concerned something which he was pleased to say was a very rare occurence in Sino-British trade. A certain company (name and address supplied), had ordered and received a consignment of sewing machines from China. espite requests, no payment had been received, and the firm now owed some £9,000 to China. It was a small firm, and may be in financial difficulty; nevertheless, the matter affected confidence in the integrity of British merchants, and must be settled. Could we please assist him in bringing about a satisfactory conclusion.

(5)

Agreed,

I asked whether the commissioning crew had arrived

to take over M.S. Dunhuang.

Seven senior officers were already here, and the ren- ainder of the crew should arrive this month.

The second vassel would be named *JINSHA', and should be launched in March or April.

course, vessel.

(6)

I told him we might wish to entertain the crew in due and I should like to attend the launching of the second

I told him that the organisers of the 'Do-it-Yourself & Handicrafts Exhibition' once again had offered exhibition space to China in the Autumn,

Huang knew nothing about this but had attended the exhibition in 1966 and was not convinced that it met their needs. There was a strong emphasis on tools, and only a limited display of foreign hariicrafts. He would let me know if China decided to exhibit.

(7)

I recalled that I recently sent him tickets for seven exhibitions due to take place in January. I had offers of many more and proposed to maintain the flow throughout the year if he did not consider the demands on his time already excessive,

He welcomed the invitations. They were of interest, and when he was unable to use tickets he always passed them on to his colleagues. I should continue to send them.

(8)

He passed to me some calendars for Mr Taylor, who had admired them and wished to have more. I also was offered one.

I also accepted a desk calendar, and copies of Corporation catalogues requested at the beginning of the month.

·(9)

He was sure I had seen all the sensational rumours and bogus reports on the China situation in the British and foreign press. As an 'expert', I would know how ridiculous these stories were.

Harvests in 1966 had been exceptionally good, and industrial production had risen by some 15. Lies and rumours such as he had seen in our press merely made Chinese more scorn-

of the opinions voiced.

(Huang) Mr. Oancia in Peking had only to lift the telephone and a foreign friend in Nanking had been able to tell him the truth about the situation there. There was no disturbance.

(Huang) The British Government had offices in Peking and Shanghai and undoubtedly also received correct reports about the situation there.

Here I remarked that he surely would have noticed that HMG had refrained from any comment on the situation. Reporte so far were all from reporters and China-watchers. Bales Tours were still advertising tours of China due to take place in March and Hay 1967. If the tours took

If the tours took place as arranged, the touriste surely would bring back the truth about the situation.

Huang, however, considered that these false reports would damage the confidence of British businessmen trading with China. Had I in fact heard that any were worried?

Of course, I said,

What do you reply?

many have telephoned to us already.

I inveniably tell them that they should not believe everything said to have been culled from wall posters, and so far as we know, the Corporations are still continuing normal business, and so should we. There was no cause for premature alarm.

This hit the jackpot and produced smiles and nods of agreement all round.

On this note we parted, and I have since written to thank him for a most productive business meeting.

12th January 1967.

中华人民共和国駐英国代办处商务室

Commercial Section,

OFFICE OF THE CHARGÉ D'AFFAIRES

OF THE PEOPLE'S REPUBLIC OF CHINA

4-7 Gloucester Gate,

Regent's Park,

London, N.W.I

YOUR REF:

EF:

Telephone:

Cable Address: CHINACOM LONDON

Telex 23343

Envitations to Lundle on 14.8.67

Cammenght Rooms- 19.45 p.m.

ין

Commerciel Secretary

Commercial Section

}

✔ Mr. Huang Wen-chun

Hr. Sun Shih-wei

✔ Kr. Jen Ju-tai

Ditto

✔ Kr. Shih Sung-sheng

Ditto

/lir. Chen Yuan-shen

Vitto

✔ ir. Li Wen-chun

Ditto

Saut

11.1.67

Sino-British Sino - British Trade Council

中英貿易协会

President: Mr. John Keswick C.1.0.

RECEIVED IN ARCHIVES N... 31

- 9 JAN 1967

| FCG/1.

Ente pl.

zoomo/1

The Association of British Chambon

The China Associatka

The Confederation of British Industry

The London Chamber of Commerce

Our ref: NFW/VR.

CONFIDENTIAL

21 Tothill Street, London S.W.I Whitehall 6711

Members of the Executive Council.

fur boss.

Dear her

5th January 1967.

Please refer to my letter of yesterday's date with which I circulated the minutes of the meeting of the 3rd January. I now send you herewith an amended page 2 of the minutes with the request that you insert it into your copy and destroy the page in your possession. This is by the wish of the President and in order to avoid any possible embarrassment by the mention of names.

It is also requested that you treat these minutes, as well as the copy of the cable I sent to you under the cover of my letter of the 29th December 1966, as confidential and keep them under your personal care.

Yours sincerely,

N.F-Webb Secretary-General

Enter

(c)

IN CONFIDENCE.

Sino-British Trade Council

中英贸易协会 President: Mr. John Keswick C.M.G.

Sponsors: The Association of British Chambers of Commerce

The Federation of British Industries

Our ref: NF7/VR.

The China Association

The London Chamber of Commerce

21 Tothill Street, London S.W.1

Whitehall 6711

4th January 1967.

The President and Members

of the Executive Council

Dear her hoss,

I send you herewith copy of the minutes of the meeting held on Tuesday the 3rd January 1967.

Yours sincerely,

Thanks. Now

ja.

11/1/67.

·F. DN.

Pl. amend Webbis

N.F. Webb Secretary-General

requested

muniter

lette

S Jom.

- below.

2. Classify this

confidance."

Doni "//

IN CONFIDENCE.

Sino-British Trade Council

nutes of the twenty-first meeting of the size our 25 il a.m. on Tuesday the 3rd January 1967 67

etneson & Co. Ltd., 3 Lombard Street, E.0.3.

Present

Guest

Mr. John Keswick, C.M.G.

Mr. J. Brereton.

Mr. H.J. Collar, C.B.E.

Mr. A.S. Gilbert, C.B.E.

Mr. Eliot Hodgkin.

Mr. A.R.B. Hore.

RECEIVED IN ARCHIVES 16.51

-9 JAN 1967

Feoll.

hela

President of the Sino-British Trade Council and Chairman

Mr. ́P.A.E. Lawrence (vice Mr. Bramley)

Mr. B. MacTavish.

Mr. A.E. Marker.

Mr. D.J. Mose.

Mr. R. Reid-Adem, C.B.E.

Mr. S.C. Sevard, 0.B.E.

Mr. H.S. Stebbing

Kr. E.S. Taylor

Mr Theo Peters, H.M. Commercial Counsellor in Peking. Secretariat

Mr. N.F. Webb.

Mr. P.s. Marshall

Apologies for Absence,

Apologies for absence were received from Kesers Bibby,

Bramley, Stafford and Waite.

Item I Members of the Council

(a) The President' extended a welcome to Mr. H.3. Stebbing, Managing Director of Barrow, Hepburn & Gale (Machinery) Ltd., newly joined member of the Council.

(b) The President reported that Mr. J.A. Swire wished to withdraw from the Council. He asked the China Association to propose a replacement.

Item II Minutes

The minutes of the twentieth meeting of the Executive Council held on the 4th October 1966 were agreed and signed.

Item III General Situation

The President welcomed Mr. Peters and thanked him

for attending the meeting.

In describing the current situation he gave it as his opinion that China is in fact in the middle of a revolution and spoke of the difficulties of trading while this is in progress. Members had been sent copies of a cable he had received from his own representative who had been in contact with a representative of C.C.P.I. T. in Peking concerning his proposed visit to China in the Spring. He had since received a letter amplifying the contents of the cable and this he reað to the meeting. It was disquieting that the representative referred to political influences both in the context of trade generally and on the subject of exhibitions. The letter also referred to the cultural revolution reaching its climax and all organisations were engaged in internal examinations with a view to the cleansing of old thoughts. This could have a serious effect on trade generally.

In the U.K. there was no sign of Li Meng-hou returning and Huang Wen-chun was adopting the attitude of being merely a stand-in. In the circumstances the President thought we should lie low but keep up the pressure as best we can.

Mr. Peters considered that the situation had

deteriorated since October when he left Peking. He thought that the cultural revolution had not yet reached ita climax, and that it was underestimated by foreign observers. He thought that things might be somewhat out of control after 17 years of stable rule. The effect would be felt in all foreign trade, not only Sino-British.

Mr. Hodgkin referred to the difficulties I.C.I. were having in getting answers to their communications to Peking.

Mr. Lawrence said that B.M.C. were currently not doing any business with China but they had sent an engineer there at the request of the Chinese.

Kr. Seward asked if the antagonism shown towards this country applied to others. The President thought that France and West Germany were doing fairly well, but any country that was deemed to support the U.S.A. was incurring the same feeling.

Mr. Peters said that he would be arriving back in Peking about the time of the Chinese New Year. As soon as possible he would try to arrange a series of lunches as he had done in the past, and the response to these should give an indication of the general atmosphere prevailing.

had

Item IV Agricultural Exhibition Proposal

Mr. Peters described the meeting he and Mr. Webb had with a representative of the Agricultural Engineers Association at the Smithfield Show and said that a meeting with a number of their members would be held on the 20th January.

The possibilities of an agricultural exhibition would be discussed and he stressed that the Chinese would want a full proposal before saying whether they agreed or not. He thought a minimum of 18 months would be required from the date of agreement with the Chinese. There was considerable discussion on the content of the proposed exhibition and the organisation necessary for contacting bodies likely to be interested as well as for coordination of the project. As a result it was agreed:

(1)

That it is worth while to go forward with the proposal, particularly since noors had yet staged an agricultural exhibition in China.

(2)

That it was unlikely that tractors and the hardware of farming by themselves would have much appeal, and emphasis should be on the scientific side of agriculture, on which this

suntry couk offer a lot. seed selection, soil treatment,

cicides, food processing and packaging should be considered. lery shoula be included. Livestock was not ruled out.

(3)

That the proper body to take on the project would be the Agricultural Export Council. However they might not yet be ready to do this.

(4)

That the Board of Trane should provide the necessary

co-ordination.

(5)

That the impetus would have to come from the 9.3. T. C. and the Secretariat should therefore proceed in co-operation with those concerned to build up a proposal.

Item V East-West Committee

The President said that when this was formed he was invited to take part since it provided an opportunity for exchange of ideas and information on treae with Communist countries. However there was a change of concept and an official body was being set up for East Europe. He had therefore opted out since there would be no place for S.B. T.0. in such an organisation, However he was still interested in exchange of information.

Mr. Reid-Aãan said that the new organisation would be set up in a week or so and explained the reasons for making 14 official.

Item VI Lunch for Chinese

The President said that it was proposed to hold a lunch for the Chinese on Tuesday 14th February. It would include the Chargé d'Affaires, Huang Wen-chum and W.T. Wang of the Bank of ' China and some of their stafía. The Chargé d'Affaires had been approached but had not yet replied. His Secretary had indicated that he might be going to China.

(a)

Item VII Other Business

Kr. MacTavish reported on the Technical Journal proposal which was under consideration in the Board of Trade.

He asked about the timing or an approach to the Chinese in view of the present situation. The President said that this was something he wanted to take up personally and it looked as though this might not be possible until Autumn.

(b)

Kr. Stebbing said that his company was finding communication with China quite normal except with Dairen, and asked Mr. Peters if he could suggest any explanation. thought there might have been a change of name.

(0)

The President

Kr. Collar mentioned the Chinese refusal to permit the use of the hall in Peking for the Swedish Exhibition in April and asked if anyone had further news. It was thought that both this and the Danish event in March were cancelled.

[