Cable from Ambassador Katori to the Foreign Minister, 'Prime Minister Visit to China (Conversation with Chairman Deng Xiaoping)'

Number R037811

Primary: Asia and China

Sent: China 21:10 Year Month 25

Received: MOFA 22:28 1984 March 25

To: The Foreign Minister From: Ambassador Katori

Prime Minister Visit to China (Conversation with Chairman Deng Xiaoping)　

      Do not cite underlined in press release

Number 1361 Top Secret Top Urgent Q36RA

Regarding Wire 1350

Prime Minister Nakasone had a conversation with Chairman Deng Xiaoping at the Great Hall of the People on the 25th at 9:45am for approximately and hour and a half. The primary topics of conversation were: 1. Japan-China relations and economic cooperation relations; 2. Sino-Soviet Relations; 3. Retrospection by Deng Xiaoping.

(Sino-Soviet relations and retrospection by Deng Xiaoping in Separate Wire 1 and 2)

(Additional Chinese individuals in attendance: Foreign Minister Wu Xueqian, Petroleum Industry Minister Tang Ke, among others)

Deng: I thank the Prime Minister for visiting China. It has been 5 years since meeting you in Japan. Lately, I have lessened my work to concentrate on my health. I have Hu Yaobang and Zhao Ziyang working for me at the frontlines. When the sky may come tumbling down, these two will support me.

The Prime Minister and Comrade Hu have come to a decision in Beijing with much foresight. The historical friendly relations between Japan and China must continue onto the 21^st century, and then to the 22^nd, 23^rd, 33^rd, and 43^rd century.  Currently, Japan and China does not have urgent problems. The development of Japan-China relations into the 21^st century is more important than all other issues. In this regard, I thank Prime Minister Nakasone’s meaningful visit to China.

Prime Minister: I thank from the bottom of my heart the Chinese government and people’s hospitality. I interpret this good will as being intended for all Japanese citizens. As long as Japan and China continue with current policies, there are no reasons for conflict. I believe that a friendly relation between Japan and China, one that lasts into the 21^st century, is structurally built into the 4 Principles. However, the accumulation of effort is essential and cannot be neglected.

Deng: We are mutually satisfied with the overall development of Japan-China relations. There are, however, some small problems, the problem being that Japan-China relations have not fully developed. We must see Japan-China relations from a wider and more long-term perspective. Your excellence has previously mentioned that we must not be caught up with what is immediately in front of us. However, looking even further, longer, and wider is advantageous for the development of Japan-China relations.

Prime Minister: It goes without saying that cooperation between governments is important, but widening the scope of private cooperation is also extremely important. Wide exchange between Small and Medium sized corporations is especially necessary. Japan has many small and medium sized corporation exchanges with ASEAN states, but not so much with China. Exchange between large corporations is important, but it is important to first create a wide foundation with small and medium sized corporation. Japan has learned very much in this respect since the Meiji Restoration. We want China to create opportunities and an environment for this sort of exchange.

Japanese entrepreneurs are uneasy about investing in China, and so the given circumstances are not favorable. It is important to create a relationship of mutual trust. Given that the protection of foreigner’s industrial intellectual property and patents is essential, we hope that China will participate in the Paris Treaty.

Deng: We welcome Japan’s large and small-medium sized corporations cooperating with China. We will solve the legal problems and meet other requirements for such a thing. The important thing is for the two sides, particularly entrepreneurs, to take a long-term perspective to these matters.

Hence forth, China will pursue development policies further. We are currently considering the establishment of even more special economic zones along the coastal region. We welcome the participation of Japanese corporations in these zones. China will also endeavor to maintain and prepare related laws. We want Prime Minister Nakasone and Foreign Minister Abe to encourage Japanese entrepreneurs, as well.

China has an abundance of underground resources, but does not have the funds to develop them. If the Chinese economy develops, these resources will be an important in meeting Japanese demands in the future. I believe that the development of energy resources, raw materials, and rare minerals can contribute to Japan.

It seems that some Japanese entrepreneurs do not believe that China will keep its promises. However, China is a country that greatly values promises. In terms of both politics and economics, I am confident in our ability to keep promises. During the disagreement over the plant, China took full responsibility and made sure that Japanese corporations did not take a loss.

We want you to feel assured regarding this point.

Prime Minister: I have absolutely no doubt that China is a country that keeps its promises. I believe that the special economic zone policy is a find idea. However, the preparation for legal matters is the most important point.

Deng: I am a complete novice regarding the economy, but Premier Zhao knows the economics well, and he is taking the lead in this regard. The overall circumstances in China are favorable, however, the issue is whether a 4-fold increase in gross national product is actually possible or not. That is, will it ultimately end as just much ado about nothing. At the moment, judging by the state of the 6^th 5 year plan, 4-fold increase is believed to be possible. This issue was raised during former Prime Minister Ohira’s visit in 1979 when he asked what China’s goal for the 4 Modernizations was. I was pressed for an answer and so answered that we are thinking about a 4-fold increase. Therefore, this idea arose with inspiration from our friend the former Prime Minister Ohira.

To realize this goal, we must grow the GNP by 7.2% every year.

Prime Minister: From our experience, the economy is a difficult problem that cannot be solved with simple equations of numbers. More than building factories, the important thing is to effectively manage businesses. Therefore, it is a software issue.

Deng: China has divided the time until the 21^st century into decades, the 1980s and the 1990s. It is our goal to attain on average a 6.5% increase during the former decade, and, in preparation for the latter decade, to concentrate on the development of energy, logistics, raw materials, and knowledge. Finances are necessary for this, but China is facing financial insufficiency. Because there are no other ways, China is pursuing a policy of seeking foreign investments. We are currently receiving very important economic cooperation from the Japanese Government, but considering China’s needs it is very small. An American company is discussing the possibility of establishing a chemical fertilizer plant using natural gas from near Hainan Island. We want Japanese companies to also make daring investments. The unpreparedness of the Chinese legal system is a momentary issue, it can be reformed if given time. We hope for the Prime Minister to convey to Japanese investors to have a long-term perspective and to not wait until the laws are completely prepared.

Prime Minister: The Japanese Government will continue with its efforts and will also speak with the private sector. However, given that China is a large country, cooperation between governments is only a drop in the bucket. The important thing is to create a path and flow for private cooperation. Regarding private cooperation, it is extremely important to increase cooperation between small and medium sized corporations, both in terms of expanding a foundation and increasing employment opportunities.

(Afterward, Chairman Deng provided some explanation of China’s employment situation)

Please forward to Shanghai. (End)