TNAG-1622-FCO40-2236-Relations-between-Hong-Kong-and-China-1987 — Page 26

CONFIDENTIAL

Trade

2.

The Ambassador has argued that the China market

remains a promising one for British Industry. This is no

doubt right in the sense that imports will continue to

grow, and there is no threat to the open-door policy. But we shall need to keep reminding companies that the

China market is unlikely, because of the difficulties that have arisen, to expand as quickly as was envisaged when the programme of economic reform was launched.

Joint Ventures are likely to prove unprofitable so long as the internal market structure remains unreceptive and

difficult to manage so long as the debate about

centralisation of decision-making is unresolved.

the shorter term, whilst decision-making at all levels is

hampered by failure to agree on a coherent policy at the

centre, delays, obstruction and disappointments are

inevitable even for straightforward suppliers. The Chinese market is one for companies able and prepared to invest considerable resources in preparing the ground.

Aid

And in

3. The Ambassador's telegram does not refer to British

aid for China, and the Department agrees that China's recent economic performance does not have any direct new implications for our aid programme. Before considering any further increase in aid, we shall need to gather experience of operating the recently enlarged programme. This will take some time as the problems with decision

making and the continuing need to conserve foreign

exchange have combined to lengthen the negotiations and

FCLABK

CONFIDENTIAL