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7/14/1963 - Exploratory Talks with Mr. Lu. by Anthony R. Dicks

INSTITUTE OF CURRENT WORLD AFFAIRS Guilford Street London W C July Exploratory Talks Lu Richard H Nolte nstitute Current World Affairs adison Avenue New York N Y Der Nolte On Vce inister Foreign Trade People Republic China LU Hsu chang arrived London three visit official guest Her ajesty Government It event without precedent somewhat sombre history relationship Britain China since Not first visit Britain Chinese dignitary first minister People Republic Western country purpose other Laos negotiations Geneva Not Britain singled distinction after leaving Nr Lu delegation spent several Switzerland followed several weeks Netherlands There nothing about invitation originated Erroll President Board Trade Nr Lu principal official Peking Parliamentary Secretary Board Trade The first public indications inVitation might taken November wholesale cancellation Chinese orders Soviet Union Estern Europe being accelerated The firSt November later Set aside doubtless because situation Indian frontier visit postponed until It perhaps worth noting ssumption British Government ttitude hostile China including supply advice India radical breach commercial relation ships followed British ction Suez 0rdan Belgian action Congo Lu visit seems useful starting point Survey aspects Chinese trade Britain In letter I shall visit perspective subsequent letters I shall develop problems arise Before I relate details I disposal I Lu visit necessary something which China carries foreign trade Although might there private trade Chin foreign trade carried nurnber publicly orbed corporations behalf government E these bodies deals particular commodities types commodity exception function import export encies Although branches cities China itself branches outside China exception China Resources Compa Limited Hong Kong regular agents abroad Western European countries I present purposes regular relationships firms brokers which unimportst Chinese Government lrgest single charterers tramp shipping The result although China trade still through merchants Hong Kong particularly regards exports trade elsewhere either special missions going country another letter telegraph It should apart banks which maintain branches Shanghai there British commercisl estab lishments China In general foreign businessmen given visas enter China specifically invited trading corporations though twice trade Canton present export commodities those traders prepared journey spend month bargaining before gettinga commitment As eports China arranged Chinese missions abroad there quite umber these England years At higher level there Commercial Counsellor attached Office Chinese Charg Affaires London Western Europe other being Berne Just Soviet Trade Delegation London lurks seclusion fashionable wooded suburb Highgate commercial centres London Chinese Commercial Counsellor office eually residential though fashionable north Regent Park almost discouraging people feels leaving their offices there The Commercial Counsellor rarely agent trade corporations directly seems chiefly adistributor doubt gatherer information issUing among other things rterly Foreign Trade People Republic China On British there several organizations interssted furtherance China trade The London Chamber Commerce Association British Chambers Connerce speak selves The Federation British Industries department devoted problems trading Communist countries which takes great interest China There China Association consisting largely merchants others trading China probably largely representing interests importers It appears Bulletin serve subsidiary function keeping 0ntact former British residents China These constituent members Sino British Trade Council formed which unofficial negotiating China Chinese Government purpose being represented China Committee Promotion International Trade This latter number important functions among being provision arbitration facilities foreign trade It parent various Councils Promotion International Trade which nnber countries apparently their chief objective ending embargo there London which occasionally broke small firms which anxious business Chinese It seems qaite clear Mr Lu visit meant herald radical change pattern He himself described gOodwill gesture explore possibilities Sino Bri trade expansion In particular there clearly question tiation inter governmental trade agreement Such agreements whether traditional favoured nation usually concluded familiar economic relations Communist stateS pattern trading between China Western countries trade though China concluded treaties number under developed countries A recent example PakiStan China signed treaty Commerce navigation granting favoured nation treatment January As correspondent Britain really receiving least disfavoured nation teatment It arrangement edits Lu objectives despite prospect improved harvestS seems unlikely China could large strides foreign trade without particularly present relationship Soviet Union source credit That certainly editor Sunday Times present impossible substantiate It certainly unlikely reason coming supervise several deals course negotiation could normal missions trade corporations which there several country The visit lasted three Mr Lu companions including Mr Hsieh Shou msmaging director China National etals inerals Import Export CorporatiOn three himself former Shanghai brokers The fourth young interpreter accountsa particularly alert despite apparently inferior function The after arrival Lu called President Board Trade Economic Secretary Treasury inister State Foreign Office During three weeks visits arranged number important industrial centres including works arconi Vickers aircraft I C I kinds chemica products chemical engin eering CotaUlds textiles English Electric Company Steel Company Wales Guest Nettlefolds steel Rootes Itractors trucks assey Ferguson trct0 VisitS Port London Brand nuclear power station shipyards Glasgow planned clled Cr swley At personal level talks would appear visitors lthough described operators official lowed themselves admire industrial progress England moderately admitting would years China catch Apart however I understand showed almost total ARD indifference aspects English across I heard complaints about English provincial hotels which delegation extensive Older members schooled English restaurants Of which sometimes hears those familiar Shanghai former As official after firSt anyone Lu position allowed There quite careful preparation visit The press asked tactfully describe Mr Lu delegation correctly coming epublic 3hina C never Communist mainland China which would regarded abusive calculated poison inter national relations Inevitably someone slipped there vigourous protests Foreign Office Board Trade The Chinese I understand found accept Government control press after constitutional guarantee freedom press Article Of Constitution provides Citizens People Republic China enjoy freedom speech freedom press freedom assembly freedom association freedom procession freedom Of strati0n The state guarantees citizens enjoyment these freedoms providing necessary material facilities At conclusion visit after round official offiCial entertainments which toasts freely exchanged future Sino Bitish trade Vice inister words press London Air After telling purpose viait goodwill gesture explore ibilities trade expansion people ustrial commercial circles COmmon desire expanding trade between countries Britain advanced induStrial coumtry products market China A Board Trade spokesman announced Chinese Govern invited Mr Erroll return which accepted without being fixed What visible results Lu visit It certainly certain amount solid commercial negotiating visit Of which details light urmhsingomssions various trade corporations England during period January Yay It early exactly business example order placed Hsieh Shou Richa Thomas Baldwins worth plate sheet steel Mr Hsieh previously spent exploring West German steel market deals announced quarter I doubt negotiations strengthened Mr Hsieh Britain A number orders given mission Ir Chen Yang Deputy General Manager China Ntional Machinery Import Export Corporation negotiations still pending things precision machine tools driving control equipment industrial marine agricultural irrigation machinery On other standing negotiations China Bristel Bwitannia turbo airliners which B O A C trying buyer successful despite flight Lu friends It appears Chinese enough technical problems pesed introd uction Writing Vickers Viscount which bought difficult introduce another foreign aircraft A tangible nonetheless significant result visit British businessmen returning Spring export commodities Canten month reported Chinese trade authorities disposed towards British interests result Lu coming Britain Other evidence atmosphere arrangement exhibition preducts certain products three British firms Peking starting July lasting several weeks The three firms I C I De La Rue organ Crucible Company An invitation given morse extensive exhibitien Peking Autumn It clear however occasion display Western luxury there consu goods display An Chinese point which immediately suggests itself ultimate consumers imported equipment managers China industry direct contact manufacturers greater placing orders All given certain amount speculation cautious optimiSm about possibility considerable increase British trade With Chin future Such development would prticularl welcome moment there sharp continuing volume trade between countries since which continues reflected monthly trade figures As table which I eproduce below shows which Chinese policy reducing corercil contacts Communist world height total trade figures climbed steadily until after which effects disastrous harvests failure great forward policy began itself seriously sphere foreign trade through grave shortage foreign exchange despite heavy selling silver bullien London market The figures recent article China Quarterly A Boone reent The Times ARD millions Year Exports China Imports 0from China For important qUantities silver bullion value respectively imported making approximate values general merchandise those years These figures certainly force recent remark New York Times The China trade keeps beckoning remains mirage dependable reality A businessmen England allow themselves beemtd Nitut going question China foreign trade structure whole I summarize arguments forward follows The agricultural administrative dislocations years effect reduced number agricultural products which could abroad foreign currencies about China eports earlier years products foodstuffs involved country extensive purchases grain abroad which drain foreign exchange earned Accordingly reports better harvests justified importers exporters optimistic It noticeable Chinese shown prticular interest buying machinery plant which directly related needs culture together stated objectives Government giving impression Chinese regard improvement agriculture first towards achieving viable economic position internally externally This whole meets approval those upturn foreign trade though Course recognized there remain Several important obstacles problem credits referred earlier Mr Lu visit course light friction between China Soviet Union It clear ttempt create monolithic economic foundered extent importsnce disruptions which taken place since becoming clearer In absence official statistics United Nations economists estimated Sino Soviet trade alone greater later years Now according letter Communist Party Soviet Union July appears these figures fully justi On initiative eople Republic China Government volume China trade Soviet Uuion almost three yearS deliveries industrial plantS dropped The Chinese begun complain bitterly which their economic effort undermined withdrawal Of Soviet assistance technical financial Without apportioning blame Can serious dislocation place China trade serious ComLuist haVing almost source China credit though already being curtailed It wOuld probably probably u_wise regardthiS breach irreparable economic sphere least April after Lu ended visit China U S S R signed agreement current middle June agreement providing scientific nical operation further signed It among terms former treaty provision balance which accumulated China favour should debts Soviet Union which strictly which suggests China moment contemplating increase imports Russia significance second ought overlooked That there diversification China foreign trade within Eastern shown example Rumania which itself appears following policy which counter Russian policy moment The months unprecedented number exchanges between countries agreements missions It thought importance China third Of needs imported Rumanians doubtless supply developing Chinese industry Nonetheless likely large proportion China imports Comm unist world The Soviet Union probably alone seeking increase West result dispute Partly doubt political reasons prtly maybe thebelief capitalist world better security against sudden disruption plans perhaps partly reason inhibited Indonesians Russians could Soviet loans American tractors rather Russian Chinese appear seeking commercial contacts Western countries Britain unprecedented scale Those interested China trade comfort these developments their difficulties there In later newsletter I describe problems confronting private individual company trades China Yours sincerely Received New York July