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The system was not well adapted to rapid modernisation but

the Chinese Government hoped that within three years the

country would be pointed in the right direction. Mr Blaker

emphasised that there was a mutual interest between Britain

and China in the modernisation of the Chinese economy.

Britain hoped to do business with China, together with

Hong Kong. We were looking forward to receiving Huang Hua

in Britain in October.

4.

Reverting to the refugee conference, Mr Zhiang said that China would be doing more. Refugees continued to arrive in

China and the latest arrivals were mainly people of

Chinese origin. The current flow rate into China was 10,000

a month. Of those who had already reached China he estimated

that some 30,000 wanted to be resettled elsewhere. The

Chinese Government had discussed possible arrangements with

UNHCR. The trouble was that many of these refugees had

formerly been small businessmen who did not fit in easily to the farming economy of the southern provinces of China. The fishermen were perhaps an easier case: they could come

and go.

China would also consider taking up to 10,000 refugees from the ASEAN countries, particularly from Thailand. China would also make a small contribution to UNHCR funds

as a gesture of goodwill.

5. Mr Zhiang said that on processing centres these existed in practice already. China was continuing to explore the possibility of making available an island in the South China Sea. Dr Hartling had asked about it. He had also suggested

that some of the refugees now in Hong Kong might be sent to China for a temporary stay of up to three years. The Chinese

Government was considering this. They had to bear in mind that the local Chinese population might be inspired by transit

centres inside China to seize the

to seize the chance to go abroad as well.

Many Chinese would want to go to Hong Kong, which they admired

as well administered and prosperous.

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