CONFIDENTIAL
060312
MOTTAN 6725
3.
CHINA AND BRITAIN SHARED AT LEAST ONE COMMON ASPIRATION: THE MAINTENANCE OF HONG KONG'S STABILITY AND PROSPERITY. THIS WAS ALSO IN THE INTERESTS OF HONG KONG PEOPLE. DURING PREVIOUS TALKS THE CHINESE SIDE HAD SAID THAT AS LONG AS THE TWO SIDES STAND ON A HIGH PLANE AND LOOK AT PROBLEMS FROM A LONG PERSPECTIVE A SOLUTION COULD
BE FOUND. JIANG DID NOT INTEND TO DISCUSS OTHER RELATED ISSUES SUCH AS THE AIRPORT: QIAN QICHEN HAD ALREADY GIVEN CHINA'S POSITION
AND JIANG SUPPORTED WHAT QIAN HAD SAID.
4.
MOVING ON TO THE DOMESTIC SCENE, JIANG SAID THAT AFTER A LONG PERIOD OF EXPLORATION CHINA HAD ENJOYED GOOD ECONOMIC DEVELOPMENT, PARTICULARLY SINCE 1978. UNDER DENG XIAOPING'S GUIDANCE, THE CHINESE GOVERNMENT HAD FOLLOWED THE POLICY OF ONE CENTRAL TASK, TWO
BASIC POINTS. MAJOR PROGRESS HAD BEEN MADE OVER THE LAST 20 YEARS. CHINA'S POLICY NOW SEEMED VERY SIMPLE: THE OPEN DOOR AND REFORM
POLICY. BUT IT HAD NOT BEEN SO EASY IN 1978: IT HAD NEEDED THE POLITICAL COURAGE AND VISION OF DENG XIAOPING TO CARRY THROUGH THIS POLICY BECAUSE HE HAD TO GET RID OF THE CONSTRAINTS OF A CENTRALLY-PLANNED POLICY WHICH HAD EXISTED FOR DECADES. THE 14TH PARTY CONGRESS IN 1992 HAD DECIDED ON THE OBJECTIVE OF ACHIEVING A SOCIALIST MARKET ECONOMY HAD BEEN DECIDED. THIS WAS ITSELF WAS A
RESULT OF THE OPEN DOOR AND REFORM POLICY. CHINA WAS NOW IN A TRANSITIONAL PHASE FROM A CENTRALLY-PLANNED TO A SOCIALIST MARKET ECONOMY. ALTHOUGH THE ROLE OF CENTRAL PLANNING HAD DIMINISHED THE LEGAL FRAMEWORK FOR THE NEW SOCIALIST MARKET ECONOMY WAS NOT YET ENTIRELY IN PLACE. IT WAS TO A CERTAIN EXTENT INEVITABLE THAT THERE SHOULD BE A FEW PROBLEMS IN THE ECONOMIC FIELD DURING THE
COURSE OF THIS TRANSITION.
5. WHEN DENG XIAOPING MADE HIS SOUTHERN TOUR IN 1992 HE SAID THAT CHINA SHOULD CONCENTRATE ON DEVELOPING ITS ECONOMY. THIS DECISION WAS ALSO ADOPTED AT THE 14TH PARTY CONGRESS. SINCE THEN PEOPLE IN
ALL PARTS OF CHINA HAD BEEN VERY ENTHUSIASTIC ABOUT ACCELERATING
ECONOMIC GROWTH. IT SHOULD BE SAID THAT THE DOMESTIC ECONOMIC SITUATION WAS VERY GOOD. THE GROWTH RATE IN 1992 WAS 12.8 PERCENT. THIS WAS VERY GOOD. IN THE COURSE OF HIGH ECONOMIC GROWTH THERE WERE SOME PROBLEMS BECAUSE THE SYSTEMS OF THE CENTRALLY-PLANNED ECONOMY COULD NOT COPE. THESE WERE EVIDENT IN THE FINANCIAL SECTOR AND IN THE SCALE OF INVESTMENT WHICH HAD BEEN RATHER TOO HIGH. WHAT COULD THE CHINESE GOVERNMENT DO WHEN FACED BY THESE PROBLEMS? THEY COULD NOT ADOPT THE OLD PRACTICE OF ADMINISTRATIVE
INTERVENTION OR EMERGENCY RETRENCHMENT BY THE CENTRAL AUTHORITIES. THEY NEEDED TO ACCELERATE THE ESTABLISHMENT OF THE SOCIALIST MARKET ·
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