CONFIDENTIAL
A
difficulties of market-oriented management.
But continued
economic difficulties this year will make it harder to
provide major new impulses, for example to establish a
rational system of prices.
External Relations
7. The spotlight in 1986 will probably remain on Sino-
Soviet relations. There remains no immediate prospect of a
major political breakthrough. The crucial issue is
therefore probably the extent to which China is prepared to
allow relations to develop in practice despite this. Trade,
economic and cultural ties will probably continuing
developing rapidly. They will not come close to balancing
China's relations with the West; but recent progress has
nevertheless been more significant than Chinese statements
sometimes imply.
UK-China Relations: our objectives
8. 1985 was a good, but not a vintage year for UK-China
relations. We made steady progress towards most of our
policy objectives; there were no major failures. I attach a
detailed assessment.
9. Hong Kong remains the most important bilateral factor,
both for us and for the Chinese.
[passage by HKD commenting on paras 14-16, and on how well
(FED)
we achieved our objectives as regards Hong Kong (attached).
10. In trade and economic relations, we fulfilled or came
close to most of our short term objectives.
Particular
J19ABD
extrets