Office of the Historian

133. Memorandum of Conversation1

Washington, September 7, 1978

PARTICIPANTS

  • Secretary Kreps
  • Chai Tse-min—Chief, PRC Liaison Office
  • Frank Weil—Assistant Secretary, Industry and Trade Administration
  • Kempton Jenkins—Deputy Assistant Secretary for East-West Trade
  • Roger Sullivan—Deputy Assistant Secretary, East Asian and Pacific Affairs
  • Peng Ching-po—Chief, Commercial Section, PRCLO
  • J. Mishell George—Deputy Director (Acting), Bureau of East-West Trade
  • William Clarke—Director, PRC Affairs, BEWT
  • Hsu Hsuan-wei, Interpreter, PRCLO
  • Nancy Chen, Interpreter, ITA/BEWT

SUBJECT

  • Ambassador Chai’s Call on the Secretary

After the Secretary’s welcome, Ambassador Chai noted that trade was up, but not to the levels it could be with the normalization of Sino-American relations. Mrs. Kreps thought trade might top one billion dollars in 1978 and Chai responded that it would be good if it tripled.

The Secretary noted Chinese plans for the development of the economy and asked what the U.S. could trade with China in support of their modernization program. Chai said many products from the U.S. were needed by China, but again he returned to the theme that trade would be larger with normalization and the solution of some other problems. Chai observed that the U.S. refused to sell certain products to China. He also noted the absence of MFN for China saying this created certain problems for their exports. Chai did not dwell on the problems and hoped that normalization would wipe them out and promote trade. At no time were trade problems concerning textiles and clothespins mentioned.

Turning to the recent wheat sales, the Secretary said she was pleased the Chinese were again buying U.S. agricultural products. The Ambassador, quoting Teng Hsiao-ping, said China was basically [Page 528] self-sufficient in grain, but due to occasional catastrophes sometimes needed to import grain. He could not give a figure on import requirements, but did note that in buying grain the PRC must look first to Canada, Australia, and France because of normalized relations with these countries.

Mrs. Kreps mentioned the interest in the U.S. in the possibility of joint development of China’s offshore oil and gas resources. She said American petroleum technology is the world’s best. Chai acknowledged this and said four American oil firms had discussed this matter in Peking recently.

The Secretary, taking note of Dr. Press’ recent visit, said she was encouraged by the increase in scientific and technical exchanges and the prospects for more.2 Chai said there would be more cultural and scientific exchanges and that Chinese students would come to the United States in 1979 to study English. He said there was a need to introduce U.S. types of advanced technology into China and that he would like to see this occur as it would help increase U.S.–China trade to $10 billion (sic). He said China needed U.S. satellite technology, mining equipment, products in the energy area, and transport equipment.

Mrs. Kreps, citing the President’s stated objective of normalizing relations with China, said she did not know how long this would take, but that the sooner negotiations started, the better it would be for trade. Although normalization is a matter for diplomatic channels, we can not remain indifferent because of the impact in the commercial area. Twice Chai responded by saying that normalization was now mainly up to the United States.

Ambassador Chai, confirming an invitation for the Secretary to visit China, indicated she could have “wide ranging” discussions in Peking on trade matters. Chai said time in 1978 is short and the Chinese leaders already have a heavy schedule for the balance of the year, but said they would be glad to receive her in 1979. The Secretary said she too had a demanding schedule but would welcome a trip after January. Chai inquired if she could suggest a time and the Secretary indicated the first quarter between January and April. She said she would consult her schedule and get back to him with a proposal for a specific time. Chai said he would convey this information to Peking.

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Finally, Ambassador Chai, noting the plummeting dollar, asked the Secretary what steps the U.S. Government was taking to stop this. The Secretary then explained the Administration’s efforts at some length. She concluded by saying that improvement in the balance of trade was a major factor and that this was one reason she felt expanded Sino-American commercial relations to be essential.

The Ambassador expressed the thought that improving the balance of trade was a tough job for the Department, but that in any event U.S.–China trade will increase in step with our political relations.

  1. Source: Carter Library, National Security Affairs, Brzezinski Material, Country File, Box 8, China (People’s Republic of): 9–11/78. For Official Use Only. Drafted by William Clarke, Director of the PRC Affairs Division in the Bureau of East-West Trade, Department of Commerce, on September 13. The meeting took place in Secretary Kreps’s office.↩
  2. See footnote 6, Document 129.↩