CONFIDENTIAL
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i) China's economic growth rate had recently
accelerated and there appeared to be a resurgence of overheating. This, if it remained uncontrolled, might lead to further stringent measures and controls on the economy. However, the full effects of recent greater
recentralisation and stricter import controls had
not yet been seen.
ii) there was concern about the effects of the
campaign against bourgeois liberalisation on the
economy, especially on economic reforms, but there
had been repeated reassurance from the highest
levels. Given possible overheating and the structural imbalances in the economy, the Chinese might wish to slow down certain reforms such as price reforms, not only for economic reasons. suggested that this area be kept under regular
review.
PA
iii) the Chinese appeared to be concerned by the
slowdown in the rate of foreign investment, and had announced 22 new provisions as a means of
improving the investment climate. The trade
deficit, while still large in absolute terms, appeared to have been brought under control: there had been slow growth in imports and a large increase in exports, despite the fall in oil
prices.
iv) there had been a surge in Hong Kong of re-exports of China origin, indicating that China was making more use of Hong Kong's efficient port to gain
access to world markets.
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