TNAG-2468-FCO40-3592-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 5

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5. THE PRESIDENT SAID THAT THE IMPACT OF THE CONDITIONALITY BILL WOULD NOT BE CONFINED TO THE STATE ENTERPRISE SYSTEM. IT WOULD HURT INDEPENDENT INDUSTRIAL AND AGRICULTURAL ENTERPRISES WHICH WERE

CLOSELY LINKED IN THE MANUFACTURING PROCESS WITH LARGE STATE

CONTROLLED FACTORIES AND MARKETING AGENCIES. AMERICANS TOO WOULD BE EFFECTED. CHINA'S RETALIATION FOR THE LOSS OF MFN WOULD COST

THOUSANDS OF AMERICAN JOBS.

6"

FINALLY THE PRESIDENT SAID THAT ENGAGEMENT RATHER THAN CONFRONTATION OFFERED THE BEST HOPE FOR REFORM IN CHINA.

LEGISLATION THAT PLACED CONDITIONS ON MFN WOULD ENDANGER THIS

POLICY.

SIGNED S D PATTISON

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