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spectrum of opinion on the question of normalisation with UK in the middle of the pack. The US-China relationship remained problematic with the Clinton administration concerned over human rights and reviewing China's MFN status.
3. Mr Wye (RAD) mentioned recent releases of students and
other gestures on human rights. He speculated that the timing might be connected to forthcoming US-China trade talks, but in general the outlook was better than six months ago with signs of
a freer intellectual mood.
4.
Mr Lane (Economic Advisers) spoke on China's rapid economic growth, casting doubt on some of the Chinese official statistics.
He raised three significant points: the extending of SEZ conditions to all coastal areas, border areas and the Yangtze
Valley; price reform; and enterprise reform. He said that fears of inflation and overheating had taken the gloss off the economic boom on little but the Chinese economy was stronger than during the last period of overheating and the actions necessary
to put it back on course were less drastic. As an area where
growth was continuing when much of the rest of the world was in depression, China was likely to retain the interest of foreign companies and investors. During the 1990s China was likely to be an importer of food, oil and capital equipment.
5. Mr Morris (HKD) outlined the background to our current
difficulties with the Chinese over Hong Kong. There were three small incidents, none of them intentional on the part of HMG,
which worried the Chinese prior to Mr Patten's arrival in the
territory. Mr Patten spent three months after his arrival
studying Hong Kong and finding out what was wanted. When his
proposals for constitutional development were announced, the Chinese reacted far more strongly than anticipated and attempted
to insult and smear Mr Patten. Since December 1992 there had
been a slight moderation in the Chinese stance. There was now an
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