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. And in
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
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
FC1ABK
CONFIDENTIAL
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