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CONFIDENTIAL
BRITISH EMBASSY,
PEKING.
SUMMARY
ECONOMIC REFORM IN CHINA
The enclosed memorandum by Mr Roderic Wye, First Secretary, describes the reform programme, which began in the economic sphere, but now goes wider. Hu Yaobang, General Secretary of the Central Committee of the Chinese Communist Party, has said that its three economic imperatives are to open the Chinese economy to the outside world, reform its rigid structure and develop a planned socialist commodity economy
(Paragraphs 1 3)
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The new leadership of 1978 embarked on the programme because it wanted to galvanise China's economic development. It rejected both economic Maoism and the system introduced, under
Soviet inspiration, during the 1950s. (Paragraphs 4 7)
The economic component of the programme is related to ambitious targets for growth. Its parameters include the provision of employment, the control of inflation, the preservation of living standards for all and the preservation of socialism. Quite what is meant by the last of these
remains to be seen.
(Paragraphs 8
The
Difficulties have arisen over the improvement of capital
productivity, the matching of supply and demand through price reform, foreign trade and foreign investment. Chinese leadership may soon face the choice between restraining imports and borrowing a good deal from abroad at non-concessionary rates of interest.
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13)
(Paragraphs 14 24)
Economically, China is no longer a country of mystery. (Para 25)
Not much analysis of the Chinese economy is published in the British press.
China has studied Yugoslav and Hungarian
experience in economic reform. The Russians are now less suspicious of the reform programme in China. But does their attitude now go beyond a suspension of suspicion? A despatch on the non-economic aspects of the programme will follow.
(Paragraphs 26 - 28)
CONFIDENTIAL