CONFIDENTIAL
who
As to the leadership, it is hard to believe that Zhao Ziyang, has become Acting General-Secretary, will retain the premiership if, as is generally expected, he soon becomes permanent General- Secretary. There are quite a few candidates for the post of Premier, of which the Vice-Premiers Li Peng, Tian Jiyun and Qiao Shi and the very successful Mayor of Tianjin, Li Ruihuan, are probably
the strongest. What seems to be certain is that Deng himself will not be able to retire from his remaining Party and State posts this year, as he and many others had suggested that he would.
4. In spite of what has happened, I believe that Deng and his associates still want to create a society with three characteristics absent from Chinese society when they came to undisputed power in November 1978. These are economic efficiency, political community and autonomous institutional strength.
5. A good deal has already been achieved. Economically, the policy of opening to the outside world and many measures
stimulate production in agriculture and industry have been introduced. Politically, the Party has set out to reunite society, having abandoned the prosecution of class warfare as the "key link". Institutionally, a certain amount has been done to create both a
body of law and a judicial system which is not just a political instrument. But a lot remains to be done; and the big question now is how its accomplishment is to be reconciled with a campaign against those who were most ardent for change.
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6. The Chinese economy performed only moderately well in 1986. Real GDP growth was in the neighbourhood of 7%, a good deal lower
than in 1985. The deficit on trade account was reduced from
$15 billion in that year to $12 billion. Given the collapse in the price of oil, which led to a reduction of about $3 billion in the value of China's oil exports, this was a good performance.
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CONFIDENTIAL
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