ABSTRACT

This chapter addresses some specific issues and their effects on the supply of foreign exchange earnings and foreign capital in the general context of the ongoing economic reform and readjustment. It discusses the nature of the uncertainties in this regard confronting Chinese policymakers. The new policy approach outlined has developed partly out of the dissatisfaction on the part of the more powerful political leaders with mainland China's economic stagnation since the Cultural Revolution. The central planning apparatus and the centrally administered sector are large bureaucratic structures that can inform themselves of what has happened only rather slowly. The chapter presents a third source of uncertainty, the effect of political and ideological posturing on foreign capital. The Hong Kong issue surfaced prominently in the summer of 1982 in the wake of the British prime minister's visit to Peking. Many Chinese political leaders in Peking who have become prisoners of their own ideological isolation have stayed in their confined quarters.