"The Weekend Australian", August 24-25, 1996 - By Richard McGregor in Beijing.

The Chinese Premier, Mr Li Peng, warned the Minister for Foreign Affairs, Mr Downer, yesterday against meeting the Dalai Lama and hinted at reprisals if Canberra gives the Tibetan spiritual leader a high-profile welcome when he visits Australia next month.

Mr Downer said in Beijing that Mr Li had referred in a meeting with him to China's recent downgrading of relations with one of its strongest Western partners, Germany, over support in Bonn for Tibet.

However, Mr Downer said Tibet was an issue over which China and Australia disagreed and he was at pains at the end of his first ministerial visit to Beijing to underline the strength and depth of the bilateral relationship.

Mr Downer said rapidly rising bilateral trade and investment, which has enjoyed double-digit growth for the past three to four years, and a new security dialogue with China had cemented an already firm relationship.

"It is a broad and strong relationship. We don't agree with each other on everything and we don't pretend to agree with each other on everything," he said.

The build-up to Mr Downer's trip was plagued by controversy over Tibet, a visit by an Australian minister to Taiwan next month, the end of a soft-loan facility to Asian countries including China, and Beijing's reservations about Australia's recent defence agreement with the United States.

China's outspoken statements on these issues raised concerns that Beijing was using the election of a new government in Australia to gain concessions on issues like Taiwan and Tibet.

"I can't make a judgment as to whether they are putting the new Government to the test, but the fact is that Australia has its national insterests," Mr Downer said in defending its Government's stand. "Our position on ministerial visits to Taiwan and the Dalai Lama is far from unique. It is quite a common phenomenon around the world to have these difficulties with China."

Mr Downer had meetings with his counterpart, Mr Qian Qichen, the Foreign Trade Minister, Mrs Wu Yi, and a 45-minute session with Mr Li.

While Mr Downer said both sides had put their "well-rehearsed positions" on Taiwan, Mr Li's intervention over Tibet appeared to have raised the stakes over the Dalai Lama's trip to Australia and the possibility of a meeting with the Prime Minister, Mr Howard.

Beijing angrily cancelled ministerial visits with Germany after Bonn hosted and international conference on Tibet and its parliament, the Bundestag, passed a resolution condemning China's human rights abuses in the remote Himalayan area.

"I took Li Peng's comments to be a message that China's leadership did not want Australian ministers to meet with the Dalai Lama. This is an issue on which we don't agree," Mr Downer said.

The dispute over aid cuts, however, appears to have been partially soothed by a new offer from Australia to fund some of the projects abolished by the axing of the concessional financing program, the Development Import Finance Facility.

Mr Downer said Australia and Chinese officials were studying which of the 20-odd programs ended by DIFF's abolition could be revived by Canberra's offer to provide extra funds from the aid budget.

He also lauded enthusiastically the agreement for Australia to begin a bilateral security dialogue with China, which will be launched by a prioneering visit by Australia's defence chief to Beijing next month.

Mr Downer said he had raised issues of human rights abuses with Mr Qian, as well as the case of jailed Chinese-Australian businessman Mr James Peng. He also initialled an agreement to maintain Australia's consulate in Hong Kong.

Forwarded to WTN News by Alex Butler, Autralian Tibet Council