continuity of policy after Deng (who is now 81 and whose
health has been the subject o
nt speculation) is now
central to any debate about China (including that on UK
policy). I agree with the essence of the Ambassodor's view,
but believe that some caveats are required.
3. Deng and his reformist colleagues certainly made further
significant progress in 1985. As Sir R Evans indicates,
practical economic questions are now firmly established at
Debate on details of
the centre of Chinese policy debate.
(perhaps wider
policy is itself more rational and better informed than ever
before in China. The concept of "socialism with Chinese
characteristics" is proving serviceable in justifying
radical departures from Marxist-Leninist dogma without
threatening Communisty Party legitimacy.
And reformist
leaders now dominate at least the upper levels of almost all
arms of Chinese authority.
4.
Against this, however, the reforms in the urban economy
are still at a stage where each step forward can create
serious new problems. There are good indications that, in
some areas and sectors, retail price inflation is running
well ahead of increases in income. And the foreign currency
position is perhaps more complicated than paragraph 6
implies: China experienced a visible balance of trade
deficit in 1985 of US$7.6bn. Last years' immediate crisis
has indeed been brought under control; and the Chinese would
not allow external debt to become large enough to create
serious debt service problems. But China's ability to
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