TNAG-2801-FCO40-4041-Hong-Kong-six-monthly-meetings-of-foreign-ministers-1993 — Page 48

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OF TRADE, INCLUDING USING THE ROLE OF HONG KONG, WHICH JIANG HAD MENTIONED. THE SECRETARY OF STATE HAD TWO QUESTIONS. FIRST, HOW WOULD THE SLOW BRAKING OF THE ECONOMY AFFECT THE SPECIAL ECONOMIC ZONES (SEZS)? SECOND, HOW DID JIANG SEE CHINESE AGRICULTURE DEVELOPING IN THE LIGHT OF HIS ANALYSIS? WERE THERE PARTICULAR PROBLEMS AND HOW WOULD THEY BE TACKLED?

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JIANG REPLIED THAT THE PROCESS OF ESTABLISHING A MARKET ECONOMY HAD JUST BEGUN. THE GOVERNMENT NEEDED TO PROCEED SLOWLY. FOR EXAMPLE STOCK EXCHANGES, REAL ESTATE AND DEVELOPMENT ZONES SHOULD NOT BE RUSHED AT THIS STAGE. IN 1992 THERE HAD BEEN TOO MUCH INVESTMENT IN REAL ESTATE IN THE COASTAL REGIONS. THIS COULD LEAD TO A BUBBLE ECONOMY AND THIS TENDENCY NEEDED TO BE CURBED. HUNAN,

FOR EXAMPLE, HAD GOOD DEVELOPMENT IN AGRICULTURE. MONEY SHOULD BE INVESTED THERE TO BUY AGRICULTURAL PRODUCTS AND DEVELOP IT FURTHER. BUT INSTEAD THE MONEY IN THE BANKS HAD BEEN DIVERTED INTO REAL ESTATE IN THE COASTAL AREAS. CHINA HAD A POPULATION OF 1.16 BILLION. PROVIDING ADEQUATE FOOD AND CLOTHING WAS ALWAYS IMPORTANT. THIS WAS WHY THE AGRICULTURAL SECTOR WAS SO IMPORTANT. IN THE RURAL AREAS THE GOVERNMENT WAS USING SCIENCE AND TECHNOLOGY AND EDUCATION TO IMPROVE AGRICULTURAL METHODS, BUT THERE WAS STILL A GAP BETWEEN CHINA AND THE DEVELOPED WORLD. TO A LARGE EXTENT AGRICULTURE IN CHINA STILL DEPENDED ON NATURAL CONDITIONS.

13. THE POPULATION OF THE RURAL AREAS OF CHINA WAS ABOUT 900 MILLION. THERE WERE AS MANY AS 100 MILLION SURPLUS LABOUR, SO THE GOVERNMENT HAD ESTABLISHED TOWNSHIP ENTERPRISES. IN THE COASTAL REGIONS AND DEVELOPED TOWNS THE LOCAL GOVERNMENTS HAD INVESTED THEIR PROFITS IN LOCAL AGRICULTURE, SO THE SITUATION WAS QUITE GOOD. BUT THE SITUATION WAS LESS GOOD INLAND. IN WUHAN GRAIN PRICES HAD FALLEN AS LOW AS 40 FEN FOR 1 KILO. THAT HAD A BAD EFFECT ON FARMERS' ENTHUSIASM OR MORALE. LOCAL BANKS HAD ALLOCATED MONEY FOR LOANS TO DEVELOP REAL ESTATE AND INDUSTRY AND, UP TO THE END OF LAST YEAR, HAD ONLY GIVEN THE FARMERS IOUS INSTEAD OF CASH FOR THEIR GRAIN. AT THE END OF 1992 AND IN EARLY 1993 JIANG HAD MADE A GREAT EFFORT TO STRESS THE NEED TO END THE PRACTICE OF ISSUING IOUS AND TO PURCHASE PRODUCE AT THE PROTECTED PRICE. THINGS WERE NOW BETTER. JIANG HAD RECENTLY VISITED THE NORTH-WEST OF CHINA CHANZHONG?) AND HAD FOUND THAT THE FARMING FAMILIES WERE AGAIN ENTHUSIASTIC. THE GRAIN OUTPUT FROM THE SUMMER HARVEST WOULD EXCEED LAST YEAR'S, DESPITE NATURAL DISASTERS EG IN THE NORTH-WEST. AS FOR THE SURPLUS AGRICULTURAL LABOUR, RURAL ENTERPRISES OFFERED THE SOLUTION.

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