fixed at between 71% and 9% while the rate for Euro-dollar bonds might be slightly lower.
5. Mr Pao said he understood that the Governor would be retiring in the not too distant future. He considered the present Governor was very important to Hong Kong and sought Lord Goronwy-Roberts' views. Lord Goronwy-Roberts said we had Hong Kong continually in mind and kept a daily watch on developments there. Thanks to the quality of British diplomats nothing had been done to upset China and we did not wish to take any action likely to upset the status quo.
6. Lord Goronwy-Roberts said there was a certain amount of Parliamentary and public pressure for the improvement of economic and social conditions in Hong Kong. Fiscal and other policies adopted by Hong Kong tending to show the world that conditions were being improved would go a long way toward satisfying opinion. Mr Pao replied that Hong Kong relied heavily on trade. One had to be very careful therefore to ensure that she remained competitive. Failure to do so would result in her not being favourably looked upon as a good place for investment and this could adversely affect Hong Kong's trading position and economy.
17 February
Hong Kong and Indian Ocean Department
cc:
NENAD
M & TD
DOT (CRE 4)
PS/Lord Goronwy-Roberts