CODE 18-77

AWO Ltd.

7/84

Mritskuto

CONFIDENTIAL

Reference..

FROM: K C Walker

Asian Region

pa 72514

Nat-

Research Department OAB 2/125 210 6220

DATE: 7 April 1986

6611

Mr Orr FED

DENG XIAOPING: TIME/MAGAZINE'S MAN OF THE YEAR

(610)

1. Mr Henderson's minute to you dated 2 April mentioned two questions posed by Mr Renton on reading Sir Richard Evans' despatch on Deng Xiaoping.

2. On the first point, it is clear that Chinese leaders themselves are aware of the danger that losses of reserves and foreign exchange deficits might lead to a build up of pressure against "the open door" policy. During 1985 they acted to curb imports, particularly of consumer goods. Speaking to the National People's Congress on 25 March, the Chinese Prime Minister in reaffirming the open door policy emphasised the need to increase exports so that China could afford to import technology. China's present leaders seem firmly committed to this policy, while displaying increased caution about disadvantageous side-effects. But in the longer term the extent to which this policy can produce the benefits expected by the Chinese is likely to determine whether they continue with it or turn against it.

3. Deng's reference to the Chinese people as "descendants of the Yellow Emperor" was in the context of a call for support for Peking's policy on "peaceful reunification" with Taiwan. This formulation, which has been repeated in other major speeches, reflects the Chinese sense of race. While it does not imply an stiffening of policy towards the Tibetan and other minorities (who together form under seven per cent of the total population and who have received slightly improved treatment from the present leaders), it does betray a degree of racial arrogance which is also reflected in Chinese attitudes to other ethnic groups living on and around Chinese territory. Tensions between the Chinese and minority races in China will persist, although serious outbreaks of unrest are likely to be infrequent because of continued firm control by Peking over the minority areas.

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RECEIVED IN REGISTRY

30 APR 1986

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INDEX

PA

Nicfalken

Kenneth C Walker

CONFIDENTIAL

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