Mr O'Keeffe, HKIOD
Dim
1116.
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Mr badlón Mr bully
cc Mr Cortazzi
Mr Larmour
Mr Bentley, FED
zy
SIR Y K KAN
1.
2.
Y K dropped in this morning for a chat.
On the economic side he thought that Hong Kong was now getting into high gear; orders were flowing in; by September quotas would have been exhausted; the question was what then
to do.
3. I asked what he thought of the piece in the current Far Eastern Economic Review contrasting Hong Kong and Singapore. He had glanced at it and put it aside for closer reading.
He thought it was a workmanlike job which had been well researched. But it was false to compare the two. Lee Kuan Yew could get away with things in Singapore that no Governor of Hong Kong could contemplate. In the monetary field Singanore was more restricted - Singapore residents could not hold f oreign currency deposits, hence the need for the "Asia dollar", Above all of course, Hong Kong had to be continually realistic about Chinese reactions to whatever they might do. Some Members of Parliament who visited Hong Kong and used phrases such as "ivory tower" were not there long enough to comprehend how important, and how much a day to day concern, was the mainland China dimension.
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4. An interesting statistic: the thrifty inhabitants of Hong Kong had between them opened some 2 million savings accounts in the local banks.
5. There was no obvious message that Y K had come to put across though clearly the drift was that Hong Kong was unique and its Government needed to be able to operate in a unique way, accepting though he did that tax rates were a matter on which HMG had a legitimate point of view.
6.
On China he opined that Teng still had a substantial following in the provinces and that the last had not been heard of him. His assessment was that when Chairman Mao died there would be a couple of years of uncertainty while the succession was sorted out.
6. For what it is worth, he thought that the stand-by credit for sterling announced yesterday would not get to the root of the problem and that international banking confidence would not be restored until the inflation rate was seen to be down and exports picking up. But he was glad to notice signs that people had
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