(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000606050001-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: January 12, 2017
• Document Release Date: March 4, 2011
• Sequence Number: 1
• Publication Date: May 6, 1986
• Content Type: MEMO

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Central Intelligence Agency
DIRECTORATE OF INTELLIGENCE
6 May 1986
Yao Yilin's Visit and Sino-US Economic Ties
Summary
Chinese Vice Premier Yao Yilin, who has ties to top Chinese con-
servatives as well as reformers, will be the most senior Chinese to visit
the United States this year. Although not a member of the inner circle, he
is a highly regarded technocrat with considerable influence over China's
trade and finance policies. While in Washington for the Joint Commission
on Commerce and Trade, he will press for access to US markets, for rati-
fication of the bilateral tax treaty, and for US support of China's goals in
GATT and the Asian Development Bank. Yao's delegation will also visit
private industry to encourage trade and investment.
Yao Yilin--Low-Key, Respected Economic Leader
Vice Premier Yao Yilin will be here primarily to attend the annual session of the
Joint Commission on Commerce and Trade with the Department of Commerce 15-16
May. He is the head of the Chinese delegation and cochairman of the meetings. In
This memorandum was prepared by Loffice of East
Asian Analysis, and with a contribution by Office of
Central Reference. Information available as of 6 May 1986 was used in its preparation.
Comments and queries are welcome and may be directed to the Chief, China Division,
OEA
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Yao is an able finance and trade bureaucrat who helped lay the foundations of
Beijing's economic reforms in the early 1980s. Along with Vice Premier Li Peng, he has
played a key role in developing Sino-Soviet economic relations. His influence has
grown recently as Beijing has sought to regain control over an overheated economy; in
fact, Yao was promoted to full Politburo membership last September. Although he is
often seen as a protege of China's leading conservative, Chen Yun, with whom he has
lengthy career associations and shares some ideas on economic development, Yao has
long avoided taking sides in factional imbroglios over ideological issues.
Yao is a patient administrator who tends to work behind the scenes to maintain
economic control and balanced growth. When he does make public policy statements,
his views are well-supported and have presaged trends in Beijing's policies. Yao's rela-
tively low profile and his age (68) lead some observers to conclude that he is not a se-
rious contender for a higher leadership position, but as one of the regime's most ex-
perienced and respected economic leaders, he is well-placed to be an influential figure
The Focus Is Economic Issues
Trade protectionism will be a key issue during the visit. Yao's delegation will
press US policymakers for more liberal treatment of Chinese exports, especially textiles.
Chinese leaders are concerned that growing protectionist sentiments in the United
States will limit China's market access and reduce earnings Beijing depends on to fi-
nance its imports. Delegation members realize that China's recent trade performance
weakens their case. Beijing's first quarter statistics show exports up 14 percent and im-
ports down 1 percent, narrowing China's trade deficit and suggesting that policies to
control imports and promote exports are working.
Yao will probably urge more US flexibility toward China's participation in the
Asian Development Bank (ADB) and GATT. He will ask for US support in China's move to
gain a seat on the ADB Board of Directors. The Board is now limited by charter to 12
members and China could only be included if another member is unseated or if the
charter is changed. Neither option is popular with board members, but Beijing believes
that most members would go along if the United States supported China's bid.
In addition, Yao will probably seek a reversal of Washington's demand that China
join GATT as a new member rather than resume the membership it abandoned in the
1950s. New membership would require Beijing to negotiate trade concessions--broader
than recent revisions of tariffs and trade controls--to meet GATT standards. Yao may 25X1
also take this opportunity to discuss renewal of the GATT's Multifiber Arrangement,
which monitors world textile trade; China wants future trade to be less restricted. F-1 25X1
The delegation is certain to inquire about the status of the Tax Treaty, especially
now that a separate protocol--signed during Secretary Baker's visit--seems to resolve
issues of concern in the Senate. The Chinese have a poor understanding of the US
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separation of powers and may believe the administration can now quickly move the
treaty through the Senate. They may also expect US officials to be ready to assist in
the dispute between Beijing and a US automobile manufacturer whose joint venture is
faltering because of China's shortage of foreign exchange. Finally, they will reiterate
China's complaints that COCOM restrictions do not treat China as a friendly state, and
that Washington should permit more technology transfers.
Yao and others will also ask US businessmen to understand China's financial
straits, stressing that foreign exchange controls and trade promotion schemes are re-
storing foreign exchange balances. They will encourage US firms to invest in China and
to lobby Washington for China's interests.
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Distribution: Yao Yilin and Sino-US Economic Relations
National Security Council
1 - David Laux, Senior Staff Member for China, Taiwan, and Hong Kong
Department of State
1 - Honorable George Shultz, Secretary of State
1 - Joan Plaisted, Deputy Director of the Office of Chinese Affairs for Economics, De-
partment of State
Department of the Treasury
1 - Honorable James Baker, Secretary of the Treasury
Department of Commerce
1 - Honorable Malcolm Baldrige, Secretary of Commerce
1 - Mel Searls, Deputy Assistant Secretary of Commerce for East Asia and the Pacific 1
- Christine Lucyk, Director, Office of the PRC and Hong Kong, Department of Commerce
Office of the US Trade Representative
1 - Joseph A. Massey, Assistant US Trade Representative
1 - William Abnett, Director of China Affairs
Central Intelligence Agency
1 - NIO/EA
1 - D/NIC
1 - D/Office of East Asian Analysis, Room 4F18
1 - Chief, Production, Office of East Asian Analysis, Room 4G48
1 - Chief, China Division, Office of East Asian Analysis, Room 4G32
1 - Chief, Defense Issues Branch, China Division, OEA, Room 4G32
1 - Chief, Development Issues Branch, China Division, OEA, Room 4G32
1 - Chief, Domestic Policy Branch, China Division, OEA, Room 4G32
1 - Chief, Foreign Affairs Branch, China Division, OEA, Room 4G32
5 - OCO/IMB/CB, Room 7607
1 - DDO/CH/E
1 - C/PES/DDI, Room 7F24
1 - OCR/ISG, Room 1H18
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