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PARTICULARLY INVESTMENT, SECURITIES AND STOCKS. THE OPENING OF FURTHER STOCK EXCHANGES IN REGIONAL AREAS IN ADDITION TO SHANGHAI AND SHENZHEN WAS UNDER STUDY. AND MORE PARTS OF CHINA, INCLUDING COASTAL CITIES, WERE OPENING TO FOREIGN INVESTORS AND FOREIGN BANK BRANCHES. LI HAD PARTICULARLY VALUED DISCUSSING WITH THE BANK OF ENGLAND THEIR EXPERIENCE OF FAILURES IN FINANCIAL MANAGEMENT. SOMETIMES LESSONS COULD BE LEARNT MORE FROM FAILURES THAN FROM SUCCESSES.
6.
THE FOREIGN SECRETARY SAID WE WATCHED WITH INTEREST THE TRANSFORMATION OF CHINA'S INDUSTRIAL AND FINANCIAL SECTORS. HE NOTED THAT THE IMPETUS CAME FROM INNOVATIVE DYNAMISM OF PEOPLE AT THE BOTTOM ENCOURAGED BY POLICY-MAKERS AT THE TOP, A FORMIDABLE COMBINATION. PART OF THIS TRANSFORMATION INVOLVED CLOSE COOPERATION AND CROSS INVESTMENT BETWEEN ENTERPRISES IN HONG KONG, SOUTHERN CHINA AND THE COASTAL PORTS. THERE WERE STILL PROBLEMS TO BE DISCUSSED AND RESOLVED BETWEEN BRITAIN AND CHINA OVER THE NEXT FIVE YEARS BUT THESE ECONOMIC LINKS WERE A POSITIVE FACTOR. HE HOPED THE OPENING OF THE BANK'S OFFICE HERE WOULD ALSO HELP. IT WAS IMPORTANT TO HAVE GOOD RULES AND PROPER STANDARDS.
HE WONDERED WHAT LI THOUGHT WERE THE MAIN CHALLENGES IN THE FINANCIAL SECTOR OVER THE NEXT THREE YEARS.
7. LI SAID THIS WAS INFLATION. THE MONEY SUPPLY AND GRAIN PRICES WERE THE KEY. THE GOVERNMENT HAD SO FAR SUCCESSFULLY ADJUSTED MONEY SUPPLY THROUGH THE BANKS, KEEPING THE LID ON CREDITS. HARVESTS HELPED TO KEEP PRICES DOWN. IN CHINA THE GRAIN PRICE PLAYED THE SORT OF ROLE THAT OIL PRICES DID IN THE WEST. CHINA HAD ALREADY SEEN HIGH INFLATION, EG 18 PER CENT IN 1988, BUT STABILISATION PROGRAMMES DURING THE PAST 18 MONTHS HAD BROUGHT IT DOWN TO AS LOW AS 2 OR 3 PER CENT.
8.
THE FOREIGN SECRETARY WONDERED WHETHER MIDDLE MANAGERS AND PARTY MEMBERS FOUND IT DIFFICULT TO GRASP THE CONCEPTS BEHIND THE NEW ECONOMIC AND FINANCIAL TERMINOLOGY. LI AGREED THAT THIS COULD BE A PROBLEM. BUT HE CITED THE CAPITAL IRON AND STEEL WORKS AS A GOOD EXAMPLE OF A COMPANY MANAGING ITSELF AND PRODUCING SIX MILLION TONNES OF STEEL. THE GOVERNMENT DID NOT INTEND TO HELP ENTERPRISES TO MANAGE THEMSELVES. THE MORE HELP YOU GAVE A CHILD THE LONGER IT TOOK THAT CHILD TO MATURE.
9. LI THEN RAISED HONG KONG. AS THE PERSON IN CHARGE OF THE FINANCIAL SECTOR HE WAS HE SAID VERY MUCH INVOLVED WITH THE FINANCIAL SITUATION IN HONG KONG, AND ESPECIALLY INTERESTED IN
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