TNAG-1458-FCO40-1982-Relations-between-Hong-Kong-and-China-1986 — Page 139

CONFIDENTIAL

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continually to be able to defend themselves by proving that reform is working. This will not be so easy to demonstrate, as the time of the most spectacular results

is past.

Many new initiatives are bound at first to be

dislocating, as the experience with price reform has shown. All this will be available for use as ammunition by critics of the programme in order to promote their own political ambitions. If the reformers come under pressure, their reaction will probably be to draw their horns in and not indulge in new policies other than those that have been sanctioned by Deng. This will cause à further slowing down of the programme and thus exacerbate their problems. It will also discourage the intellectuals from coming up with new ideas which again strikes at the very heart of reform.

18. But the outlook is not necessarily altogether gloomy.

There probably will be a slowing down when Deng dies. But

much has been accomplished, and it would be difficult for a future leadership to turn the clock back. The recollectivisation of agriculture would almost certainly lead to a disastrous slump in production. Despite the sensitivity of the open door policy (fear of the unacceptable things that might come through it) China is now an integral part of the international economic and trading system. Though the door may close somewhat it is unlikely to close completely. Similarly, to go back on some

of the industrial reforms would be to risk a reversion to low

productivity and a low rate of growth.

So

19. Finally, reform has appealed directly to the mass of the population through its promise of higher living standards.

far these have materialised. But memories are short and

expectations have been aroused. They will not so easily be fulfilled in the future and this could cause a falling off in popular support.

1 September 1986

RD NYE

CONFIDENTIAL