TNAG-1457-FCO40-1981-Relations-between-Hong-Kong-and-China-1986 — Page 44

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dynastic decay, foreign aggression, civil war and ideological excesses, and the beginning of China's emergence into a modern, stable and prosperous state.

Nowhere is this transition more conspicuous than in Guangdong Province and, in particular, the Pearl River Delta. On my recent trip to the Delta with the Chamber, I found a similarity of spirit and purpose with Hong Kong, though obviously the level of development there still lags considerably behind the Territory. The Pearl River Delta with its frenetic building activity and its focus on practical matters rather than ideological abstractions reminds me of Hong Kong and Taiwan two decades ago as both were beginning their economic take-offs. China today is enjoying unprecedented domestic stability and as the leadership gets its economic policies right, the average "Zhou" on the street increasingly feels personally involved in shaping his own economic condition. The people in Pearl River Delta towns, like Foshan and Shunde, are working harder and

and more purposefully than before and as a result they clearly dress better, earn more, save more and spend more than before. Guangdong Province as a whole shares in this boom, enjoying one of the highest growth rates of any province in China. Led by its more freewheeling rural enterprises, industrial output in Guangdong rose by almost a third last year.

There can be no doubt that the Chinese people themselves are fundamentally responsible for the current transformation in Guangdong and the rest of China. That will continue to be the case. Foreign aid and capital can at best only meet 4 to 5 percent of China's huge development needs. For the rest, China must rely on mobilizing its own savings. Past policies forced the Chinese people to make enormous sacrifices, squeezing consumption to the limit. But sadly, these sacrifices were not rewarded because the government plowed the people's savings into investments that did not materially improve their living standards. Today, the government recognizes that the long-denied Chinese people deserve better than that. While policies still correctly encourage a high savings rate, now more of these savings are being directed into the production of commodities and services that make life better for the people. Moreover, past and futile reliance on ideological exhortation and rigid planning to achieve increased output has been replaced by an appreciation of the key roles that incentives and market forces play in stimulating production. The results, notably in the countryside, speak for themselves.

Recently some observers have been dwelling on a less positive aspect of the economic reforms: corruption. Let me touch on that for a moment. The Chinese Government sees this as a serious problem and I certainly have no intention of minimizing it. But the misuse of resources for private gain is not a problem that originated with the open door policies. It was also present in Cultural Revolution China, though the scale may have been smaller since the economic pie was so much smaller. Moreover, with China so isolated, foreigners were led to the mistaken assumption that it was largely eradicated.

As a native of New York and as a long-time resident of Boston, I can attest that there are no easy prescriptions for curing corruption. The Chinese Government is vigorously attacking the problem. As I see it, there are two ways to improve the situation: a reduction in the numerous regulations which govern life in China. The fewer the rules, the fewer the opportunities for bureaucrats to contravene them for a price; and secondly, a continuation and intensification of the reform program which has accomplished so much in promoting China's economic growth. As wealth and living standards grow in China, the temptation to grab for illegal riches will diminish in the face of greater opportunities to grab for legal riches.