CONFIDENTIAL

would not be of central importance in this respect, and

in preliminary EC discussion there have been varying

opinions expressed on how fast and how favourably

China's request for rights short of membership in the

GATT should be handled. Accession would, however, help

to reinforce outward-looking tendencies in the Chinese

hierarchy and to educate it in the workings of the

world open trading system.

4.

Conversely, a rebuff to any Chinese application

would be seen by the Chinese as having political

significance, and would tend to reinforce the opposite

tendencies in China's behaviour. Domestic opposition

to the "open door" policy on which China's leadership

has embarked since the death of Mao has been relatively

ineffective in recent years, no doubt largely because

of the clear increase in China's prosperity, brought

about by a more liberal economy. But it could easily

re-emerge precipitated by new political or economic

pressures (eg following the death of Deng, or a bad

harvest). A rebuff in the GATT would not by itself be

crucial but it would nevertheless be a cumulative

factor. A rebuff might also encourage China, if her

economic development continues on its present path, to

begin to act the rogue elephant outside the

international trade system.

CONFIDENTIAL

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