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CONFIDENTIAL
3. Hu Yao Bang is on the liberal wing of the Reformist Group in the leadership, and his resignation will be a serious blow to writers. and intellectuals in China. But the reform programme, as envisaged by Deng, never included the sort of democracy which the intellectuals had hoped for. There have been a number of set-backs to the reform programme since Deng's return to power but Hu's resignation forced in timing as it has been by his responsibility for the handling of the recent student unrest, has been the most
serious set-back to date.
4.
Zhao Ziyang apparently remains as Premier, as well as now acting as Party General Secretary. He has the reputation, as Deng has, of being a pragmatic reformer, and in his new appointment will be keen to see the reform programme maintain as much as possible of its momentum, although it is bound to lose some. Further personnel changes, involving some of Hu's proteges cannot be ruled out. The most liberal thinkers will have lost some influence. Deng Xiao Ping nevertheless remains the driving force in the Chinese leadership,
and it is becoming increasingly unlikely that he will be able to
retire this autumn since the full package of economic and political
reforms that he wishes to introduce will not be ready by that time.
5. Although we do not expect any change in China's policy towards the West in general or on the Hong Kong issue in particular, Hong Kong opinion is likely to be disturbed by this set-back for the intellectuals and the speed of political reform.
6. These recent events have highlighted the contradictions in the
Chinese leadership's attempts to introduce the necessary elements of
political reform to underpin their economic programme. Hu's resignation does not point to a change in course, but the
contradictions remain.
TMLAAV
Kim Sullivan
CONFIDENTIAL
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