CONFIDENTIAL
embryonic human rights movement in March/April were possible
setbacks for Deng Xiaoping. But he still has adequate
support within the Politburo and is likely to be able to
push forward his programme of reform and modernisation.
Session of National People's Congress (China's Parliament)
opened on 18 June: Hua Guofeng, as Premier, delivered major
report on Government work. Agenda also includes approval of
revised economic plans; electoral reform allowing for
direct elections by secret ballots; and changes in criminal
law.
Trade/Economy
5. The 10 year plan (1978-85) announced in 1978 for the
modernisation of China has been trimmed: many targets over
ambitious (eg production of 50 million tonnes of steel by
1985 1978 production 31 million tonnes), which led to
capital investments wastefully employed, and neglect of
infrastructure. Chinese also recognise their need to
generate foreign exchange to pay for large scale imports
of plant and equipment. Emphasis therefore switched from
heavy industry to agriculture and light industry. Energy,
transport, and raw materials also important for foreign
exchange and development of infrastructure.
6. The reassessment accompanied by a block on new foreign
contracts; some Japanese contracts suspended. But import
of advanced technology plant and equipment from West remains
an integral part of the modernisation programme. Scale of
imports will be related to Chinese ability to pay - renewed
emphasis on counter trade, joint ventures and cooperative
arrangements with foreign countries.
CONFIDENTIAL
/Defence