G.F. 326
CONFIDENTIAL # 3
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law was now on the statute books, it had not been implemented.
The Chinese appeared to be averse to taking risks at a time of
political uncertainty. PA agreed that the Chinese authorities
displayed strong concerns about public sensitivity to price
rises.
13.
STI commented that the Chinese application to join GATT was likely to affect the pricing policy. It was fair to
assume that the Chinese application would eventually be
accepted, but it was likely to take around four years for all
the negotiations to be completed. The Chinese were currently preparing replies to the many questions raised by GATT
Contracting Parties, most of which were related to the pricing system. China was still keen to join GATT as quickly as
possible, so this might exert pressure for change on the
pricing system. DS (ES) 2 remarked that four years was a
relatively short time in which to resolve the difficulties of
the pricing system. He wandered whether China might be
provisionally accepted into GATT on the basis of a commitment to a programme of reform.
14.
CS asked how growth in Shenzhen compared with growth
in the Pearl River Delta, given that the latter appeared to be
flourishing under different rules. DS(ES)2 said that it was
difficult to compare the two. There had been heavy initial investment in Shenzhen. The authorities were probably now content with the way it had developed into an export zone, and would probably not push too hard the original concept of a
high-technology base or a location for technology transfer.
The Delta as a whole was proving a major contributor to national growth, stimulated by its links with Hong Kong.
15.
CS enquired about the attitude of provincial offices
in Shenzhen. DS(ES)2 said that such offices had made large
profits in the early days as they imported goods into Shenzhen
and then sold them at great profit in other parts of China.
This practice was now less prevalent
CONFIDENTIAL #Z
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