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2 2 JUN 1987
CONFIDENTIAL
FROM:
KIM SULLIVAN
No Roman
ce 1916
се
DATE:
CC:
FAR EASTERN DEPARTMENT
19 June 1987
PS/Lord Glenarthur
Mr Gillmore
Mr Braithwaite
Economic Advisers
Research Department
HKD
TRED
CHINA: ECONOMY
1. As requested in Mr Culshaw's minute of 14 May, I
submit Peking telno 847 and Research Department's redraft in non-telegraphic form, together with co-ordinated comments by Research Department and Economic Advisers,
and a note prepared within the Department on implications
for UK interests. DTI and ODA concur. Mr McLaren saw and
approved this submission in draft before leaving for Hong
Kong.
2. The Chinese economy had a reasonably good year in
1986 but deep-seated problems remain. Substantial achievements include respectable growth figures and an
improved foreign trade picture (exports up by 13% with
only a negligible increase in imports).
3.
These promising signs are offset by a failure to
make progress on serious structural problems (principally
the need for price reforms and the phasing out of
subsidies), and the worrying trend for qualitative
indicators, such as efficiency and profitability.
other major unresolved problem is where to strike the
balance between centralisation and decentralisation in
The
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