TNAG-1711-FCO40-2389-Future-British-Consulate-General-in-Hong-Kong-HMS-Tamar-1987 — Page 25

CONFIDENTIAL

3. The student demonstrations, Hu Yaobang's resignation

and the campaign to oppose bourgeois liberalisation were

a setback for the reformers.

But they appear to have

weathered the worst of the storm.

Longer-term sources of

disagreement remain, e.g. over the pace and methods of

reform. While the economic reforms are generally

popular, accompanying rising prices and inequalities of

income are not. Some of the older generation, including

Politburo member Chen Yun, have also criticised the

degree to which centralised controls on the economy have

been relaxed. (Chen's prestige derives from having

opposed the idiocies of Mao's Great Leap Forward in the

late 50's when even pragmatists like Zhou Enlai and Deng

were trimmers.) Others believe the reforms and open-door

policy will mean a retreat from socialist values.

Finally, there are middle-ranking cadres who fear for

their jobs because they lack educational and technical

qualifications.

4. There is also a debate over the need for political

reforms to underpin those in the economy. The practical

outcome of this debate is unlikely to lead to the

introduction of Western-style democracy but rather to the

separation of Party and government functions, the

promotion of younger, better qualified cadres and wider

FC6AAI

CONFIDENTIAL