CHINA: PREMIER ZHAO'S VISIT TO WESTERN EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00447R000301920001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: June 8, 2010
• Sequence Number: 1
• Publication Date: July 23, 1985
• Content Type: MEMO

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vasnrgon.ac20505
DIRECTORATE OF INTELLIGENCE
23 July 1985
China: Premier Zhao's Visit to Western Europe
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Summary
Premier Zhao Ziyang used his visit to Western
Europe in June primarily to promote trade and to
stimulate economic competition between the European
countries, Japan, and the United States for sales to
China. Zhao signed several economic cooperation
agreements, including one with the UK on the
peaceful use of nuclear energy. A binding agreement
between China and the West German company, Kraftwerk
Union, for the sale of two nuclear reactors,
however, remains to be negotiated, despite the
signing of a "memorandum for nuclear power
cooperation."
Zhao also expressed China's standard strategic
concerns, urging West European countries to press
the superpowers to reduce the arms race, especially
in space. Although Beijing has not directly
criticized the Strategic Defense Initiative (SDI),
This memorandum was prepared by Foreign
Affairs Branch, China Division Office of East Asian Analysis.
Research was completed on 8 July 1985. Comments and questions
are welcome and should be addressed to Chief, China Division,
.1 1
EA M#
85-10136
DUP OF C05422704
RIP
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China shares some British and French concerns about
the adverse impact SDI could have on its limited
nuclear deterrent. While reaffirming China's
"independent" foreign policy stance, Zhao avoided
political controversy by sticking to standard
Chinese expressions of support for a "united and
strong" Europe and echoing European concerns for
peace.
China's Strategic Interests in Western Europe
Premier Zhao reaffirmed China's strategic interest in a
"unified and strong" Western Europe able to "safeguard peace and
stability." Chinese concerns, however, tug Beijing in
conflicting directions. On the one hand, Beijing favors a
strong, unified NATO on the Soviet western flank to keep Soviet
attention focused on Europe rather than China. China hopes that
greater West European cooperation on security matters within NATO
will strengthen NATO's conventional forces and lessen Western
Europe's dependence on the US nuclear guarantee, which proved so
divisive during the INF deployments.
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At the same time, Beijing wants Western Europe to exert a
greater moderating influence through NATO on some US policies
that China believes aggravate the arms race. While in Western
Europe, Premier Zhao specifically warned against the spread of
the arms race into outer space. Unlike the US deployments of
intermediate range missiles in Europe which China tacitly
supported, China fears that the US Strategic Defense Initiative
and a Soviet SDI deployed in response could neutralize China's
limited nuclear deterrent. So far, however, China has not
directly criticized the US Strategic Defense Initiative in
public. Instead, Beijing has publicized West European concerns
about the US program as a vehicle for its s in order
to avoid echoing harsh Soviet criticism. 25X1
Emphasis on Trade: Modest Results
Although Zhao touched on strategic themes, he chose mainly
to emphasize trade and technology issues during his visits to the
United Kingdom, West Germany, and the Netherlands and to avoid
political controversy. A Renmin Ribao editorial in early June
said that Zhao's visit reflects a "major policy decision " by
China "to establish a long-term, stable cooperative relationship" 25X1
._.1iV 11--ate-._ r..-_--
China wants 'to increase trade with Western Europe in 25X1
order to reduce its overdependence on trade with the United
States and Japan. 25X1
Western Europe is China's fourth largest trading area after
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Hong Kong,'Japan, and the United States. Sino-West European
trade, how er, grew by only 10 percent-in 1984 compared with a
27-percent growth in Sino-US trade. Zhao told the Europeans that
to become more competitive with Japan and the United States they
must do more in the areas of financing, economic assistance, and
technology transfer--a familiar refrain to the Japanese and the
Americans. Unlike last year, he mentioned CQCOM restrictions on
technology exports to China only in passing. 25X1
Sino-British trade grew the most of the West European
countries in 1984 (27 percent), spurring British optimism about
the Chinese market. No new deals, however, were concluded during
Zhao's visit; the economic cooperation agreement that was signed
is little more than a declaration of intent. The agreement on
the peaceful use of nuclear energy signed between the UK and
China is a prerequisite which allows British companies to bid
competitively for Chinese nuclear energy projects. The agreement
calls for safeguards by both sides onl if cooperation is
extended to sensitive areas. 25X1
Despite Germany's large share of Sino-West European trade
(30 percent in 1984), Sino-West German trade increased by only 2
percent in 1984. To help stimulate greater growth, China and
West Germany signed agreements on the avoidance of double
taxation, financial cooperation, and a 10 year extension of the
China and Kraftwerk Union (KWU) of West Germany signed a
"memorandum on nuclear power cooperation" which calls for the
sale of four 1000 megawatt nuclear reactors. The memorandum,
which was mainly a public relations gesture, is not binding on
China and only provides a framework for further negotiations.
KWU hopes to sell two nuclear reactors for the Sunan plant
outside of Shanghai and increasing amounts of technology to help
China build two more reactors later. Details, however, need to
be ironed out on a formidable array of terms, such as
compensation, financial arrangements, and special credits, before
a contract can be signed
In an attempt to offset some of the costs of the nuclear
reactor purchases, for example, China has offered to store spent
wastes, however, will face considerable opposition in West
Germany, especially from antinuclear groups such as the Green
Party that are likely to oppose the transportation of nuclear
wastes through German towns and harbors. While in Germany, Zhao
tried to reassure the Greens that China would only store t
nuclear fuel rods, not nuclear wastes.
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Potential storage in China of nuclear
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Premier Zhao's stop in the Netherlands produced little of
substance.., .The visit was intended mainly as a goodwill gesture
to underscore improving relations since the Dutch decision over a
year ago to cancel the sale of additional submarines to Taiwan.
Bilateral trade did grow by 9 percent last year, partly as a
result of that decision, and is expected to grow by a similar
amount in 1985. Only a minor agreement on the reciprocal
encouragement and protection of investments was signed during the
visit, but the Dutch hope to conclude a nuclear energy
cooperation accord of their own with China sometime later this
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SUBJECT: China: Premier Zhao's Visit to Western Europe
Distribution:
1 - Chris Szymanski, Office of Chinese Affairs,
Bureau of East Asian and Pacific Affairs, Room 4318,
Department of State
1-- John J. Taylor, Director, Office of Analysis for East
Asia and the Pacific, Bureau of Intelligence and
Research,. Room 8840, Department of State
1 - Douglas Mulholland, Deputy Assistant to Secretary for
National Security, Room 4324, Department of
the Treasury
1 - David Laux, National Security Council, Room 302, OEOB
I - Ronald Montaperto, JSI-3A, Room 2C238, Pentagon
1 - John Sloan, DIO for East Asia, Room 2C238, Pentagon
1 - Byron Jackson, Office of Intelligence Liaison, Room
6854, Department of Commerce
1 - Robert Perito, Chief, China Office, East Asian and
Pacific, Room 2311, Department of Commerce
1 - John Ray, Assistant U.S. Trade Reprsentative, Widner
Building, Room 301, 600 11th Street 20506
1 - Executive Director (/E12)
1 - DDI (/E44)
1 - NIO/EA (/E62)
1 - C/EA/RR (5D10)
1 - C/EA/CO (5D38)
1? - C/PES (/F24)
I - PDB Staff (/F30)
I - CPAS/ILS (/G50)
5 - CPAS/IMC/CB (/GO/)
1 - D/OEA (4F18)
1 - Research Director/OEA (4G32)
2 - C/China Divis ion (4G32)
1 - C/China Division/FOR (4G32)
1 - C/China Division/DOM (4G32)
1 - C/China Division/DEV (4G32)
1 - C/China Division/DEF (4G32)
1 - C/China Division/SEA (4F38) 25X1
1 - C/China Division/NEA (4G43)
1 - EURA/WE (6G28)
2 - OCR/C/RS (1H19)
1 - DDO/EA5D54) 25X1
1 - NIC/Analytical Group (/E41)
1 - C/DO/PPS (3D10)
1 - FBIS/NEAAD/China Branch (306, Key)
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L J..1
(23 July 1985)
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