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19.
private individuals. The majority would be held by
state enterprises, collectives, etc.
There were increasing numbers of foreign banks in
China, which would probably increase competition in
the domestic sector. This would be beneficial in the
long term, but the Chinese were wary about exposing
the inexperienced domestic banks to too much competition. The Chinese were also gaining more experience through greater foreign exposure, especially through Hong Kong, with visits by study groups, seminars, and the posting of trainees to Hong Kong. In the long term, this would benefit both the
Chinese economy and the Hong Kong financial sector.
The meeting noted the paper which would be copied to the FCO, Peking and the British Trade Commission.
THE SITUATION IN CHINA (PAPER 5/87)
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PA pointed out that the principal development recently had been the relative consolidation of the positions
of Deng Xiaoping and Zhao Ziyang. However, the leadership succession was still unsettled, and the "conservatives" were still quite active. Deng's
recent speech to the BLDC had shown him to be in
control. It also demonstrated that he viewed Hong
Kong with the domestic situation firmly in mind.
Zhao appeared confident and in control. He had been active in giving firm reassurances about the direction of Chinese policies. It appeared likely that he would
be confirmed as Party General Secretary at the
Congress in the autumn. The Premiership was still open to debate, but Li Peng appeared to be the frontrunner. This appeared to be confirmed by the announcement that Yao Yilin would replace him on a
visit to Moscow, indicating that Li was probably
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