NSDD 120 Visit to the United States of Premier Zhao Ziyang

-SECRET -3- TINCLASSITION Economic Relationship Second, in the economic area we should seek : - To articulate our readiness to lend support to China's ambitious modernization effort, especially through our liberalized technology transfer policy. (C) - To attempt to conclude in principle an agreement of cooperation on the peaceful uses of nuclear energy during Zhao's visit. A key to this goal is to obtain from the Premier, while he is in Washington, a clear statement that China will not assist others in any way to acquire or develop any nuclear explosive device. This, in addition to Chinese concessions on two other points--consent rights and visitation rights--would enable us to make a public announcement. (89 - To express our disappointment over the Chinese failure to abide by the terms of our bilateral grain agreement in 1983 and our expectation that they will henceforth abide by the terms of the agreement. (R) - To encourage the Chin'ese to lock beyond immediate problems in some areas to the longer-term potential of their economic relationship with the U.S. (C) - To attempt to create an atmosphere in which we can conclude as early as possible the various bilateral agreements and treaties still pending, especially a tax treaty, a bilateral investment treaty (BIT), and a renewal of the Maritime Agreement. fer - To build on the substantial trade benefits that both countries have derived over the past few years. yes Strategic/Military Relationship Third, in the area of strategic and military relations, we should strive: - To emphasize our interest in furthering strategic coopera- tion with the Chinese against the common Soviet threat. - To restate our determination to work together with them to upgrade their defensive military capabilities. Transfer of appropriate levels of technology, civilian and military, consistent with other strategic interests and international obligations, is necessary and desirable in pursuit of this objective. LST Our overall strategy should be to develop our relationship by highlighting the areas of agreement and potential cooperation with Zhao, while maintaining a firm but quiet stance on issues involving our own principles and commitments not subject to compromise. 1st Rould Regan -SECRET FUNCLRSSTFIED 14