Hanoi. I said that it was not in China's interest to have Indochina dominated by one power. I said that we were prepared to see a conference on Cambodia out of which might emerge a new government with an important role for Sihanouk. Teng claimed that the Khmer communists are essentially free of Hanoi's influence. I said that we might exchange views with Peking further on this question after the UN vote.
"With respect to the oil crisis, Teng said that inflation and worsening economic problems preceded the hike in oil prices and were due largely to price increases in other commodities. He said that China supports the use of oil as a weapon but hoped that a solution could be found through dialogue rather than confrontation between producers and consumers. I replied that while we understood China's ideological support of the third world, at some point this ran up against China's real concerns about security. (I meant this as a general point, given China's policy of hitting us in international forums on behalf of the third world, while simultaneously dealing with us as a counter-weight to the Soviet Union.) If the oil prices demoralized Europe and Japan and weakened their defenses, this would surely not be in China's interest. Nor should these countries be dependent on forces outside their control. I explained the strategy of developing consumer cooperation and stressed that our objective was to have a constructive outcome with the producers rather than confrontation. I suggested very lightly that the Chinese might want to be helpful on this question, but I did not press this because I doubt that their ideological imperatives will permit it.
"With respect to developments on food, we both agreed that the solution to the world's problem is to develop production in the deficit countries. It would not do for these countries to be dependent on a few exporters and the gap could not be made up in this way in any event.
"The Vice Premier closed the meeting with the issue of normalization. He repeated and seemed to slightly harden their basic principles on this question, while at the same time making it clear that they were in no hurry if we did not feel the time was ripe to move on this problem. He said that this did not imply their lack of desire in solving the issue, but China is willing to wait. We agreed that there would be no breakthrough on this trip.
"Teng hosted a dinner in a local restaurant featuring a Mongolian hot pot wherein you cook very tender lamb yourself. The mood at both the meeting and the dinner was very friendly. I will meet one more time with Teng Thursday afternoon to go into a little more detail on the communique with the Foreign Minister. I am giving a return banquet Thursday night and we are off for Soochow sightseeing Friday morning."
SECRET/SENSITIVE
