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125600 MDHIAN 6033
RITISH AMBASSADOR WAS MORE RELIABLE.
7.
LI PENG WENT ON TO SAY THAT CHINA WAS DIFFERENT FROM EASTERN EUROPE AND THE USSR. THE GOVERNMENT HAD CHECKED THE GROWTH OF INFLATION, BUT BECAUSE OF THE AUSTERITY MEASURES WHICH HAD BEEN INTRODUCED SINCE THE AUTUMN OF 1988 THIS HAD SLOWED DOWN THE RATE OF GROWTH. AT THE MOMENT, CHINA HAD THE PROBLEM OF A SLUGGISH MARKET. MONEY WAS AVAILABLE. THERE WAS A GOOD SUPPLY OF PRODUCTS AVAILABLE. BUT THE INTEREST RATE WAS TOO HIGH, AND THIS CAUSED PEOPLE TO BANK THEIR SAVINGS INSTEAD OF SPENDING IN THE MARKET. THE CHINESE GOVERNMENT INTENDED TO STIMULATE THE MARKET BY EASING
THE MONEY SUPPLY AND CUTTING THE INTEREST RATE. THE BASIC CONDITIONS WERE DEFINITELY IMPROVING. FOR EXAMPLE, IN THE FIELDS OF ELECTRICITY SUPPLY, ENERGY AND TRANSPORTATION THE GROWTH RATE THIS YEAR WOULD BE ABOUT 7 PER CENT OR 8 PER CENT. THIS HAD
IMPLICATIONS FOR CONSTRUCTION AND LIGHT INDUSTRY.
DONALD.
YYYY
ΜΑΙΝ
46
LIMITED
FED
HKD
NEWS DEPT
PROTOCOL D
PS
ADDITIONAL
1
OT2/2, DTI
NNNN
DISTRIBUTION
47
PS/MR MAUDE
PS/PUS
MR GILLMORE
MR WESTON
MR MCLAREN
4
PAGE CONFIDENTIAL
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