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3.
Zhao said he understood Lord Carrington had expressed understanding of China's readjustment policies. He was grateful for this. The policies had given rise to much speculation abroad. Some foreign friends had been understanding, some not. Some people doubted whether there was political stability or continuity of policy in China. Some suspected that economic
readjustment meant a change in the policy of the four modernisa- tions or in the policy of economic cooperation with other
countries.
4.
The economic and political situation in China was good, and there was political stability. The peasants, the workers and the intellectuals were all pleased with the new economic
policies. In the past two years peasants had benefited from
increased purchase prices for agricultural produce and from
production systems which linked their income with their
productivity. China was beginning to find a way to bring into full play the superiority of the collective economy
and the enthusiasm of individuals. The greatest changes were in the poorest areas which constituted 15% of the countryside. Peasants were more satisfied with party policy
than at any time since the 1950s. Their only wish was that
current policies should continue. As 800 million out of
1 billion Chinese were peasants the rural situation had a
vital bearing on the general political situation.
5.
1
The overwhelming majority of urban workers were also
happy. Emphasis was being placed on the production of consumer
goods, and on those goods which could be produced with low
energy consumption. So in each of the last two years there had been an increase of 8% in industrial growth without any
increase, or even with a decrease in energy production. Enterprises accounting for 70% of industrial porduction had been granted greater power of decision-making, giving them their own funds for investment, welfare and bonuses. In the past two years the part of a worker's income derived from bonuses had represented 15-20% of his total wage. Prices had
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