G.F. 326
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8.
9.
people and reduce nepotism and bureaucratism.
There had
been many remarks about the need for the Party to stand back from the management. This was beginning to happen at
enterprise level but was unlikely at the Centre. The
Congress was most likely to produce general statements
rather than specific policies.
S for T enquired about the status of Hu Qili. PA noted
that Hu was in the same mould as Hu Yaobang, but appeared
rather more solid. After the fall of Hu Yaobang, Hu Qili
had made a number of "conservative" remarks which appeared
to have protected his position. He was a contender for
the Party General Secretaryship, but Zhao Ziyang still seemed most likely to take on that job.
STI enquired whether there were likely to be any
reverberations in China from recent events in the
Philippines and South Korea. PA said that, given the
different natures of the societies involved, he did not
expect any.
QUARTERLY REPORT ON HK/CHINA ECONOMIC RELATIONS (Paper 9/87)
10.
DS(ES)2 introduced the paper, noting that there was still
overspending and overheating in the Chinese economy,
particularly with excessive capital investment. The Chinese Government was trying to impose tighter control
(e.g. on credit and the issue of financial instruments),
but it would take time for this to have any impact. The
impact of controls on bond issues would not be large given
the relatively small size of the non-bank sector. The
price reforms had resulted in increases in subsidies of
various forms, so the State budget deficit had increased. Around a quarter of the deficit was due to subsidies.
answer to CS, DS(ES)2 said he felt that deficit financing was a consequence of the present policies and resulted from compromise (in particular, the need for stable social
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