SECRETARY OF STATE'S LUNCH WITH BACK BENCHERS: 20 FEBRUARY 1992

Points to Make

CHINA

How to rule

How to

China remains an enigma, and a series of paradoxes. a land of 1.1 billion people? How to hold it together? develop and improve living standards? Internal tensions; growing disparities of wealth (personal and regional); growing disillusionment with ideology; nothing yet to replace Marxism Leninism; political stagnation, but remarkable ecnomic

experimentation and success.

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And

Collapse of Soviet Union a great shock to Chinese leaders conscious of their position as sole remaining Communist power. worried at possibility of unrest spilling across the border. In short term reinforced hard line political stance, re-emphasised need for politically reliable armed forces.

But economic reform continuing, and Chinese economy (especially

the dynamic coastal regions) performing well. Stark contrast to former Soviet Union. Recently some sign of reformist revival.

Internationally, despite their professed fears of US domination,

they have played reasonably responsible role (eg Gulf War, Cambodia, Lockerbie). Largely pragmatic foreign policy, apart from certain neuralgic points eg Taiwan.

Bilaterally, continuing process of rebuilding contacts. Prime Minister's and my visits last year a significant step forward. Chinese Foreign Minister to visit London on 8-10 March. Hong Kong

the central issue. Other sectoral ministerial visits also resumed

eg Mr Gummer, Lord Brabazon. Need to put an effort into trade

relations, which are disappointing.

POINTS TO MAKE:

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