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Key points from the Discussions.
IV.
1.
Price Reform. An intense discussion took place on the subject of price reform and the control of inflation. This issue is a central concern in China at the present time.
The leadership considers that the decontrol of prices over a broad area is an essential condition for moving towards a market oriented economy and a more efficient use of resources. However, public reaction to the ensuing inflation, particularly in the cities has required a cautious approach.
It was clear that the experience and insights of several expert participants on this issue had been conveyed to the supreme leaders, particularly to Deng Xiaoping, who made extensive comments. This will clearly be an important topic for the first international group which will meet in May 1989.
2. Foreign Investment. Each of the three supreme leaders made clear that rapid modernisation requires substantial increases in the flow of private investment into China. As a vast, capital-poor country with great potential, they consider that the rate of investment is disappointing at present.
They recognise that present arrangements and conditions for foreign investment must be improved and streamlined. The second international group in October 1989 will focus on this issue.
3.
Hong Kong.
An important focus of discussion was the Special Economic Zones through which, it is hoped, accelerated growth will benefit some 300 million people in the coastal areas. The relation between this part of the country with a rapidly rising standard of living based on investment in modern technology and the rest of the country was
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a matter of real concern.
In this context, the future of Hong Kong became the focus of some very strong statements, by international and Chinese participants alike. It is clear that the overall strategy of "one country, two systems" and the viability of the Special Economic Zones, will be judged by foreign investors in part according to the fate of Hong Kong. This is clear to the Chinese: Deng Xiaoping chose to make an extensive statement to the group in this sense.
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