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senior men in the construction industry, the electrical industry and the financial world, the Financial Secretary refused to see them on the grounds that if he did so, he would have to see any other Mission which came to Hong Kong.
Kai Tak
A member of my staff was informed, in confidence, by a senior Hong Kong Government official that a British firm would not get the contract as Britain had refused to extend a loan for this project, and although this would, of course, be denied officially, I and many people here believe that there may well be some truth in this. As no other country had offered to give a loan, this was, of course, sheer discrimination.
It seems to be virtually impossible to prove that Japanese tenders are Government subsidised but few people here appear to doubt it. British firms tell me that their tenders which have been cut to the bone are undercut by the Japanese by large percentages and they are convinced that no-one could do this and make money. Another explanation I have heard is that the Japanese firm expects to recover the loss by subsequent claims, as they did in connection with work for the Plover Cove reservoir.
As for the part played by tourism in the Hong Kong economy, I think the attached figures which I have obtained from the Director of the Hong Kong Tourist Association will help to qualify Haddon Cave's disclaimer.
The Hong Kong Government on the issue of subordinate status or independence clearly want to have their cake and eat it (although to be honest, looked at from the Hong Kong end, so does the British Government!).
Underground
As you said earlier, we must clearly leave the decision to the Hong Kong Government whether an underground railway system is the right answer to their problems and whether they can afford it. We obviously cannot try to persuade them to have one against what they consider to be their own interests. Indeed, if there were any risk that the order might go to the Japanese, it would be far better from our point of view if they did not have one!
In my telex CREDA 44 of 30 December, I said I had no objection to selected Whitehall Departments seeing the summary paper TAC/70 provided the source is protected. Needless to say, my relations with the Hong Kong Government would be irretrievably damaged if it became known here that this document had been passed on by me.
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