Cable No. 3772, Ambassador Nakae to the Foreign Minister, 'The Prime Minister’s Visit to China (Meeting with Premier Zhao - Trade)'

Number: [blacked out]

Primary: Asia – China

Sent: China, November 9, 1986 [blacked out]

Received: MOFA, November 9, 1986 [blacked out]

To: The Foreign Minister

From: Ambassador Nakae

The Prime Minister’s Visit to China (Meeting with Premier Zhao –  Trade)

No. 3772 Secret Top Urgent [blacked out]

Outgoing Telegram 3770 Separate Telegram 2

(Premier Zhao)

1. In trade between China and Japan, the most pressing issue is that of an excess of imports over exports. In regard to this point, our two countries have repeatedly exchanged opinions via appropriate routes and our two governments have continued various efforts, but the issue remains a difficult one. The excess of imports over exports was 2.3 billion dollars for the January – July period this year. It is expected to reach 4 billion dollars for this year. Nor will the excess of imports over exports decline much in comparison with last year. There has been much discussion in regard to the immediate situation, but little has been put into action. We hope for an improvement in the situation by means of the steady efforts of both the Chinese and Japanese sides.

2. China, having been working on improvement in quality and on reform in the foreign trade system henceforth, looks forward to relaxation on such points as Japan’s tariffs, import quotas, and quarantine. We think that there is great potential for the export of Chinese goods to Japan and that we can carry out a major increase in exports.

3. We would like to increase exports of China’s coal to Japan. The level is now at four million tons, but we would like Japan to increase imports by a further two to three million tons. This is necessary for both China and Japan (the Chinese side’s supply capacity, the Japanese side’s demand). There would not be much difficulty in doing it. In addition, it would have an immediate effect on the development of trade between China and Japan. China is working on the basis of the long-term trade agreement to improve its harbors and railways. We hope, therefore, for this effort to prove useful.

4. From a long-term point of view, expanding the exports of Chinese goods to Japan is a fundamental issue. We think that it would be possible thereby to change the structure of Sino-Japanese trade and restore the trade balance. There is a great potential in cooperation for the development of economic relations between China and Japan.

5. In regard to these issues, we hope for both the Chinese and Japanese sides to study them and, with further discussion at next year’s ministerial meeting, to consider and decide on effective measures.

(Prime Minister Nakasone)

1. In regard to the issue of coal, we have finally completed a plan to reduce domestic coal output from 16 million tons to 10 million tons. As for where we will procure the reduced six million tons, we will be holding practical discussions with the electric power, gas, and other industries.  We have a long-term agreement for trade in oil and coal, so I would like to maintain that. As for how we will import in association with the reduction of six million tons, I think that it is going to be discussed henceforth in private industry.

2. The issue of trade, in the end, is one linked to competitiveness and the stability of supply capacity. A restoration of the trade balance is our government’s basic thinking, so I would like henceforth to take your requests into consideration. (End)