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exports further. This will require rapid improvements in the quality, range and sophistication of manufactured products and will not be easy. The success of this will over the next few years determine the rate at which imports are allowed to grow. We can expect the Chinese authorities to be cautious in relaxing current controls once again. But these are directed primarily at consumer and luxury goods. I doubt whether there will be significant reductions in imports of technology for infrastructure or import substitution projects of high national priority.
4. I also attach interesting earlier minuting, stimulated by an article last July in the Economist, concluding that the Chinese will not allow a serious debt problem to develop.
Descendents of the Yellow Emperor
5.
The Han people (94% of China's population) to whom Deng Xiaoping was referring, have always had an emotional sense of national identity, whether living inside our outside China, and to the exclusion of China's minority nationalities.
This, as much as communism, has been at the root of many of China's problems in South-East Asia in recent decades.
6. Han attitudes to the minorities are (and always have been) highly chauvinistic and in some cases (notably Tibet) imperialistic. Someof the modern roots of this go back to lack of assistance by minority peoples', especially Tibetans, to the communists during the Long March (1935-36). Large minority regions have autonomy in name, but very little in practice. The few token minority representatives in senior national positions are allowed little real power. Only those who are willing to acknowledge implicitly the racial status quo have any prospect of political advancement.
7. Han dominance has however become more subtle and less heavy-handed than during the Cultural Revolution when Red Guards devoted considerable energy to trying to wipe out minority customs, shrines, religions and social behaviour. Many of the poorest and most backward parts of China are minority areas. now receive regional aid; religions and customs are once again tolerated; and there is some positive descriminations in the higher education system in favour of minorities.
These
8. Minority attitudes to Han dominance vary. Many of China's races have already become virtually indistinguishable from the Han in customs, language and appearance. Others, particularly the Tibetans and Turkic races in China's far west resent Han control. It is possible that there is still a remnant of anti-Han insurgency in Tibet. However, secessionist aspirations nowhere
amount to a serious threat for the Han.
CONFIDENTIAL
/Implications
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