TNAG-0839-FCO40-1048-Relations-between-Hong-Kong-and-China-1979 — Page 111

Mr Murray

PS/Lord Goronwy-Roberts

29

Mome

FEE-014/1

Hack and 1.2.

2 6 APR 1979

HY

65

INDEX

CHINA: INTERNAL POLITICAL SITUATION

Joy

1.

There have been a number of signs of intense debate

within the Chinese leadership on policy towards'economic planning, the reputation of Mao and human rights. possible that in this process Deng Xiaoping has suffered some political rebuffs which may have somewhat weakened his overall authority.

It

is

Economic Policy

(a)

I t has been clear for some time that China's modernisation and import programmes were being trimmed. The period of relatively unrestrained bidding from individual departments and provinces for imports to meet their requirements is over and the central authorities are now appraising the competing demands in the light of what China can realistically absorb and afford, and have encouraged individual departments to look for ways of balancing their own books. Selling to Grina hers (at

least temporarily) become more difficult, and some Japanese firms have had contracts suspended. Internal economic planning has also reflected a shift away from emphasis on basic construction in (e.g. the steel industry) to agriculture and light industrial production, which would help to provide foreign exchange to pay for the import

programme.

Comment

These developments have been plausibly associated with

the return to the Politburo of the veteran economist Chen Yun, who held various important economic ministerial posts (as well as being a Vice Premier, member of the Politburo and Vice Chairman of the General Committee) until his opposition to the Great Leap forward in the 1950's cost

/him

*

CONFIDENTIAL