16 June 1989 - 18 June 1989

Political and Economic Reform in China

Chair: Sir Richard Evans KCMG KCVO

Topicality has its price. This conference was perhaps too close to the events in Tiananmen Square for analysis and projection. It was ideally timed nevertheless to influence policy in the making. We were fortunate in having a number of participants who had been in China before and during the demonstrations, and also some, in government, parliament and business, directly involved in day-to-day decisions.

The conference considered various aspects of the situation: what had happened and why; future developments within China; the response of, and implications for, the outside world; and Hong Kong.

There was little dispute about what had happened: that, despite dissatisfaction also in the countryside, the reform movement was primarily urban; that the student demonstrators, despite considerable organisational skill on the ground, had displayed strategic ineptitude, having no clear aims at the start, beyond vague reform within the system, and then being carried away by their success into calls for the replacement of individuals and the system; that the students had been joined by workers and bureaucrats, but without any central organisation; and that finally, after a long period of indecision (due to internal debate and in part also to the Gorbachev visit), the regime had crushed the movement with calculated brutality, deliberately not employing the available anti-riot equipment or the police. The events marked a shift from control by peer pressures to control by repression, coupled with “the big lie”, that nothing had really happened.

As to why, and particularly why now, participants reached no clear view. There were a number of well-known grounds for discontent: inflation, corruption, unemployment, economic mismanagement, combined with a revolution of rising expectations. Political consciousness was growing because of improvements in communications and greater familiarity with the outside world. Nothing however had seemed likely to produce a situation which would boil over into revolt - until it actually did.

Looking to the future, participants agreed that the discontent would remain, and would surface again, but that in the absence of organisation, the chances of the reform movement (for want of a better term) achieving political change must be doubtful. The regime would act to suppress the movement and particularly the emergence of any organisation; and, faced with the pressing economic problems of foreign debt (in excess of $40 bn) and inflation, it would be likely, despite rhetoric about maintaining the economic reform programme, to try to re-impose central control of planning, foreign exchange, finance, investment and trade, with doubtful prospects for success. Thus the conference looked forward to a period of increasingly coercive, but at the same time weak, government. It was noted however that an economic downturn could either weaken the leadership’s control and strengthen the reformist elements, or, conversely, could strengthen the opponents of reform and lead to re-centralisation and more coercive forms of social, political and economic control.

Given the fragility and age of the leadership, with the prospect of Deng Xiaoping’s death at some time and uncertainty over the succession, the military could be expected to play a more prominent role, to be reflected perhaps in the Central Committee and an expanded Politburo, though divisions within the military clearly existed. No potential successor to Deng was likely to be able to exercise the same influence over the military. Li Peng in particular was not thought to be the man. A warning note was sounded that we should not assume that younger successors to the fading Long March generation would necessarily be more open to reform, even though, as was also pointed out, what we had seen in Peking and elsewhere must be but the tip of a very sizeable iceberg (or a number of them) within Chinese society.

While some felt that the western response to the events in China had been too mild, the general view seemed to be that it had been about right. Whether more would be called for, would depend on developments. As for sanctions, the point was made that to a large extent business would impose these out of commercial prudence, without government action (governmental visits and military sales had been suspended in most cases and that was right, though there were arguments for and against tightening up in COCOM). Sanctions were unlikely to influence the behaviour of the Chinese Government, certainly in the short or medium term. Nevertheless, and depending on the Chinese Government’s campaign against the reformers, some further response might be necessary as an expression of moral outrage and a message both to the Chinese leadership and to the reformers. Coordination would be desirable, and in devising measures, it was necessary to envisage (at least privately) the circumstances and manner in which they could be lifted.

“Business as usual” was the declared aim of the Chinese Government, but that could not be: the actions of the business community would themselves ensure that. The IMF and World Bank and other aid-givers should look hard at the economic prudence of their aid. The message to be conveyed was that China must act to redress the economic and political situations, if business was to return to normal.

China’s position in the world was discussed. In general China’s influence must have been reduced, the legitimacy and authority of the Chinese Government having been called in question. Foreign policy would probably be given a lower priority by the Chinese leadership. As for Sino-Soviet relations, there was a mutual interest in maintaining them at their present level - the scope for either party to exploit their relationship against the West was limited and in the new climate created by Mr Gorbachev, there was no need for the West to see a threat in this area.

China’s ultimate aim of reunification with Taiwan was unchanged. Some Taiwanese favoured independence, but most wanted improved relations with China, while showing little interest in the concept of “one country, two systems”.

China’s reduced standing could complicate progress in Cambodia; and the expected enhanced internal influence of the military could cause concern in South East Asia. South Korea might show less interest in economic relations and in Vietnam the reformers might be given pause. The Chinese leadership might be expected to pay more sympathetic attention to Tibet

The most pressing problem discussed was Hong Kong, where public opinion was described as being in despair. The dilemma facing the British Government was recognised: immigration was a highly political issue in all countries and, while comparisons could be drawn e.g. with Macao, the fact was that the numbers involved made any comprehensive offer by Britain politically difficult if not impossible (although some believed this did less than justice to the British public). There was nevertheless a strong feeling that a more generous response was called for, though some argued against hasty action in the emotional aftermath of events in China. The problem was to restore confidence to the people of Hong Kong, most of whom did not want to leave unless compelled, without encouraging an immediate exodus and thereby precipitating what all wanted to avoid, e.g. by offering some fall-back or “safe haven”. There was little doubt that in a crisis, the international community would accept large numbers of refugees, but that did nothing for confidence now. While all the British accepted Britain’s responsibility, many others argued that there was also an international responsibility (if only because of investment) and some placed the principal responsibility on China, to do something to restore confidence in Hong Kong (surely a Chinese interest) that the 1984 Agreement, sound enough in itself in all the circumstances, would be honoured when 1997 came. A suggestion that the Chinese Government might even be persuaded to postpone implementation by, say, 10 years received little support. Several argued for speedier progress towards representative government in Hong Kong, (where the events in China had provoked an unprecedented display of political consciousness), though the difficulties were also noted. No conclusions were reached, but it seemed that there was a strong feeling that the British Government could only gain by consulting their partners, even if the immediate official reaction was likely to be unforthcoming.

This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.

Conference Chairman: Sir Richard Evans KCMG KCVO
Retired as British Ambassador to the People’s Republic of China (1984-88)


The Rt Hon Sir Peter Blaker KCMG MP

Member of Parliament (Conservative), Blackpool South; Chairman, Conservative Foreign & Commonwealth Affairs Committee; Vice-Chairman, Peace Through NATO, GB-USSR Association; Vice President, Conservative Foreign & Commonwealth Council
Mr David Brewer
Director, Sedgwick Far East Ltd; Member, Sino-British Trade Council (Chairman, Financial Services Committee and member, Policy and Promotions Committee)
Mr Jeremy Brown
Director, Matheson & Co Ltd, London; Chairman, The China Association in London; Member, Sino-British Trade Council
Mr Robert Cooper MVO
Head, Policy Planning Staff, Foreign & Commonwealth Office; a member of the Programme Committee, the Ditchley Foundation
Sir Percy Cradock GCMG
Foreign Policy Adviser to the Prime Minister
Dr Cyril Lin
Research Fellow in Chinese Economics, St Antony’s College, Oxford; Programme Director, Centre for Modem Chinese Studies, Oxford; Director, Economics Training Programme (in Applied Economics for Policy Making), Oxford, for Chinese governmental and academic economists; Head, European team in international collaborative research, with Chinese Academy of Social Sciences, on “Ownership Reform and Economic Efficiency in China’’; Consultant to World Bank, Ford Foundation, International Labour Office, UNDP etc.
Dr Peter C Lowe
Reader in History, University of Manchester; currently researching for book on British policy in East Asia, 1948-54; author
Ms Colina MacDougall
China Specialist, The Financial Times
Mr R J T McLaren CMG
Assistant Under Secretary of State, Foreign & Commonwealth Office
Dr Jonathan Mirsky
Feature Writer, The Independent; China Specialist, The Observer; Chairman, Chatham House working party on China
Dr Laura Newby
Research Fellow, Royal Institute of International Affairs
The Rt Hon the Lord Roll of Ipsden KCMG CB
Life Peer (Independent); President, S GWarburg & Co Ltd; a Governor of the Ditchley Foundation
Professor Stuart Schram
Professor of Politics (China), School of Oriental and African Studies (SOAS), University of London; author
Mr Nicolas Wolfers
Group Adviser (Asia and Pacific), Midland Bank Group; Member, British Overseas Trade Board’s Japan Trade Advisory Group, Sino-British Trade Council, Opportunity Japan Campaign Steering Group; Chairman, Young China Business Group; Member, UK-Japan 2000 Group, UK-Korean Economic Co-operation Group
Ms Elizabeth Wright
Editor, The World Today, The World Service, British Broadcasting Corporation
Dr Michael Yahuda
Senior Lecturer in International Relations, London School of Economics and Political Science

Dr Jean-Philippe B
Specialist on China, Fondation Nationale des Sciences Politiques, Paris
M Michel Combal
Recently French Ambassador in Beijing (1986-89)

Dr Per Fischer

Lecturer, Political Sciences, University of Mainz
Dr Oskar Weggel
Sinologist, Institut für Asienkunde, Hamburg

Dr Guocang Huan

Researcher, Deutsche Bank Capital Corporation; Senior Fellow, the Atlantic Council of the US, Washington DC

Professor A Doak Barnett

Professor and Co-ordinator, Chinese Studies, School of Advanced International Studies, The Johns Hopkins University, Washington DC
Dr Jaw-ling Joanne Chang
Research Associate, East Asian Legal Studies Program, University of Maryland School of Law; currently on leave as Research Associate, Institute of American Culture, Academia Sinica, Taipei, Taiwan
Mr John G Day
Senior Vice President, The First Canadian Bank, Bank of Montreal, New York
Dr Phillip D Grub
Aryamehr Professor of Multinational Management and Founding Director, Programs in International Business, George Washington University; Visiting Professor, People’ s Republic of China; Consultant to American Industry on Foreign Trade and Investment; Founding Director, World Trade Center, Washington; Founding Director and Executive Secretary, US/Japan Culture Society; President, Washington World Trade Institute
Dr Harry Harding
Senior Fellow, The Brookings Institution; Member, Board of Directors, National Committee on US-China Relations; Co-Chairman, China Council of Asia Society
Mr Michael K Ipson
Vice President, Chemical Bank and Executive Director, Chemical Asia Ltd, Hong Kong
Mr Alan D Romberg
Senior Fellow for Asia, Council on Foreign Relations, New York
Mr Stanley Roth
Staff Director, Subcommittee on Asian & Pacific Affairs, House of Representatives Foreign Affairs Committee
Dr David Shambaugh
Lecturer in Politics, School of Oriental and African Studies, University of London
Mr Roger Sullivan
President, The US-China Business Council; writer on China and member, Council on Foreign Affairs
Mr Bruce Vernor
Vice President and Senior Consultant, China Energy Ventures Inc; Founding Director, the American Chamber of Commerce, Beijing; President, Beijing American Club