CODE 18-77
22012
CONFIDENTIAL
Reference.....
HKK
NED IN REGISTRY
24 OCT 1986
Mr Orr FED
DESK OFFICER
FEMISTRY
INDEX
PA
Action Taken
DESPATCH FROM PEKING: ECONOMIC REFORM IN CHINA
1. You asked for comments on this despatch.
pa
pa
15/10/30
Ликобри
25th
Cza 147
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2. One of the most useful features of the despatch and the accompanying memorandum is the realistic approach which they take to the Reform. For a variety of reasons, Western accounts of reform in China have often been over-optmistic and quite misleading. This approach could have harmful commercial consequences and the Ambassador's despatch may go some way in providing a most welcome antidote to less well researched enthusiasm.
3. I would certainly agree with the assessment that future progress will be more difficult than the progress made hitherto. Following on from this, it might be useful to look at what remains to be done rather than reviewing and assessing what has already been achieved. This would place the reforms in a different perspective and might be a useful criterion for judging the significance of reform measures. Some of these future problems are in fact already confronting China's leaders: in agriculture, the consolidation of land holdings and mechanisation are needed quite urgently if China's much improved but still woefully inadequate rural sector is to meet national needs and this process will be far more socially destabilising than the "decollectivisation" which has already taken place. The household responsibility system is a policy of rural recovery rather than a model for rural development. The questions which lay at the heart of the upheavals in the 1950s remain to be answered; in industry and commerce, the development of horizontal links which is necessary for allocative efficiency and for the formation of a national market will challenge political and bureaucratic structures more than other reforms have so far done.
4.
Paragraph 15 of the memorandum points to the problem of bureaucratic obstructionism. This is an important point and should be central to any assessment of the Reform. The implementation of reform measures appears to have been poor. To the degree that this is true, the formation and enunciation of reform policies at a central and political level is (in economic terms) irrelevant.
5. The despatch is also to be welcomed for its clarification of the question of the commitment of the reformist leadership to socialism. All too often, journalistic accounts in particular give the impression that the continued espousal of socialism is merely a ploy. Socialism as a political creed is an important source of legitimacy and the Chinese leaders have hardly any experience of anything else. Central planning remains essential as a means of directing scarce resources into
CONFIDENTIAL