CONFIDENTIAL
060312
MDTTAN 6725
HOWEVER THE SECOND ASSESSMENT SAID THAT THE CHINESE ECONOMY HAD BIG PROBLEMS AND THAT CHINA WAS ABOUT TO EMBARK UPON MAJOR RETRENCHMENT. THIS WAS IMPOSSIBLE. IN THE PAST WHEN THE SITUATION BECAME CONFUSED THE CHINESE GOVERNMENT HAD ADOPTED A POLICY OF RETRENCHMENT. ONCE THE SITUATION HAD BECOME RIGID THEY HAD THEN ALLOWED THE ECONOMY TO MOVE AGAIN. THE GOVERNMENT WOULD NOT NOW ALLOW THIS TO HAPPEN AGAIN. THAT CYCLE HAD HAPPENED BECAUSE THE CENTRAL PLANNING MECHANISM WAS ONLY PLANNING ON THE BASIS OF SUBJECTIVE IDEAS. THE CHINESE GOVERNMENT NOW ACTED IN ACCORDANCE WITH THE LAWS OF ECONOMICS. THEY WERE LEARNING HOW TO MANAGE A MARKET ECONOMY FROM THE CAPITALIST COUNTRIES. IN THE FUTURE THE CHINESE SOCIALIST MARKET ECONOMY WOULD NOT BE ABLE TO BE SEPARATED FROM THE OVERALL WORLD ECONOMY. INTERNATIONAL TRADE LINKED ALL COUNTIES TOGETHER.
9.
JIANG SAID THAT HE WAS OPTIMISTIC ABOUT THE PROSPECTS FOR SINO-BRITISH TRADE. THROUGH JOINT EFFORTS WE WOULD MAKE CONSTANT PROGRESS. IN PARTICULAR JOINT EFFORTS WERE NEEDED TO SETTLE THE HONG KONG QUESTION SMOOTHLY. THE MAINTENANCE OF HONG KONG'S STABILITY AND PROSPERITY WOULD CONTRIBUTE TO THE GOOD OF CHINA, BRITAIN, HONG KONG AND THE STABILITY OF ASIA AS A WHOLE.
10.
SPEAKING MORE GENERALLY, JIANG WARNED THAT FOREIGN COMPANIES SHOULD PAY ATTENTION TO THE QUALITY OF THEIR PRODUCT. IN THE PAST THERE HAD BEEN NO DOUBT ABOUT THE QUALITY OF PRODUCTS FROM MAJOR FOREIGN COMPANIES. HE THEN GAVE THE EXAMPLE OF AN ACCIDENT IN A POWER PLANT IN ZHEJIANG WHICH HE PUT DOWN TO AN INFERIOR COMPONENT INSTALLED BY A FOREIGN COMPANY (WHICH HE WOULD NOT NAME). HE SAID THAT COMPANIES FROM DIFFERENT COUNTRIES WERE INVOLVED IN DIFFERENT PARTS OF THE PROJECT. HE HAD NOT MADE AN IN-DEPTH STUDY OF THIS INCIDENT. SKILLED WORKERS WERE ALSO VERY IMPORTANT. NO MATTER HOW GOOD THE DESIGN THE OUTCOME DEPENDED ON THE INITIAL WORKMANSHIP: ONE LINK MIGHT FAIL, EG A WELDING. ALTHOUGH THIS WAS A TECHNICAL MATTER IT WAS ALSO A QUESTION OF LEADERSHIP. THE IMPORTANCE OF EDUCATION AND QUALITY SHOULD BE EMPHASISED TO YOUNG PEOPLE. JIANG THEN INVITED THE SECRETARY OF STATE TO ASK ANY QUESTIONS HE MIGHT HAVE.
11.
THE SECRETARY OF STATE THANKED JIANG FOR HIS INTERESTING AND ENCOURAGING ACCOUNT. HE AGREED ENTIRELY WITH WHAT JIANG HAD SAID ABOUT BILATERAL TRADE. THE VOLUME OF TRADE WAS INCREASING BUT WE STILL FELT THAT IT WAS NOT HIGH ENOUGH. IT WAS STILL ONLY ABOUT HALF THAT WITH SINGAPORE OR THE REPUBLIC OF KOREA, WHICH WERE SMALL COUNTRIES. THE CONDITIONS WERE NOW RIGHT FOR A RAPID DEVELOPMENT
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