249. Memorandum From the Special Representative for Trade Negotiations (Strauss) to President Carter1


  • Trip to China and Japan

I thought it might be useful for me to set down some impressions from last week’s trip to China and Japan and to share with you some suggestions about what we might want to do next in the China field.

In retrospect, I am convinced that the Chinese were never in a position to reach a compromise agreement with us on textiles. There are several reasons for this. A principal one can be traced to their negative perception of the claims/assets agreement. When they initialed the agreement, they apparently did not understand the difficulty they faced in recovering a sufficient quantity of the frozen assets. This realization is now feeding a growing concern that they have been taken advantage of, and that we have treated them “sharply.” Chinese Foreign Ministry officials made this point strongly in a number of conversations Dick Holbrooke and I had during the week. I think this undoubtedly is hurting Deng, and that it has reduced his ability to override others in China out of concern that he could be portrayed as acquiescing to tough U.S.-imposed conditions. In his meeting with me, he completely side-stepped textiles. The Chinese negotiators subsequently showed no flexibility.

In the end, both sides very amicably agreed to disagree. The Chinese understand that we must move ahead to take unilateral action under the terms of the Multi-Fiber Agreement. I think we came out ahead in terms of satisfying our domestic concerns on textiles. And, as I told the Chinese, we are now in a position to move ahead in signing the trade agreement. It seems highly important to move promptly on the trade agreement—immediately after the Summit—if we are to expect Congressional action this year, maintain momentum in our China relationship, and not further undercut Deng. At the same time, we should probably try hard to help them recover as much of the assets as possible.

Despite the negative aspects of the claims/assets agreement and the textile impasse, the atmosphere throughout the visit was extremely [Page 891] warm and friendly. My meeting with Deng, in particular, was relaxed and open. We were told later separately by two Chinese officials that he had been very pleased with the meeting and had wished it could have continued longer.

Their negative response to making a positive gesture toward Israel was, I guess, predictable but nonetheless disappointing. They feel—perhaps rightly—that they can best serve their own interests and help us by supporting Sadat and keeping their lines open to the other Arabs, including the PLO. Begin should be pleased that we tried, even if the Chinese did not change their position. I asked him for the smallest possible gesture—no course change.

The combining of government and business interests on the delegation worked out very well. The 23 business leaders who accompanied us had unprecedented access to a full range of Chinese economic officials and government leaders including Deng and the Minister of Foreign Trade. People like Fred Bucy of Texas Instruments, D.W. Brooks, and Dwayne Andreas of Archer, Daniels, Midland had very rewarding exchanges with the Chinese as did virtually all the others. Most will follow up with specific proposals, and some have already been invited back. Bucy and Brooks, for example, expect to take technical groups back later this year to pursue a number of deals. I think we will get good work from most of them in 1980.

[Omitted here is material unrelated to China.]

  1. Source: National Archives, RG 364, 364–80–4, STR Subject Files, Box 2, China (The Country—Not the Tableware). Secret.