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2.
3.
The FS went on to ask how, apart from trade and the economic zones, Hong Kong could best co-operate with Guangdong, for instance in the use of its port and financial services. Did the Governor see China making more use of these facilities? Mr Zeng intervened to say that the areas for possible co-operation were: first, communications (building and renovation of railways); secondly, industry (textiles, light industry, the mining of non-ferrous metals and manufacture of electrical instruments); and, thirdly, the development of economic zones. Guangzhou had a fairly good industrial base. The potential of old industries could be tapped to increase production.
4.
The ES then said that Hong Kong could contribute to Guangdong's prosperity in four ways: (i) as a market; (ii) by investment in the economic zones; (iii) by improved communications. In this category he included the sale of water and later hopefully electricity; the sale of water and electricity could not only earn foreign exchange for China but also save Hong Kong investing in expensive projects like desalination plants or new power stations; and (iv) by China making greater use of Hong Kong's container facilities and airport. Mr Feng intervened to say that a major problem was the shortage of cargo handling areas in Hong Kong. The FS replied that new cargo handling areas were being, and had been, developed, for instance in Wanchai. The PA added that the problem was compounded by the methods used by the Chinese cargo handlers. We had explained to those concerned that procedures could be speeded up. Mr Feng thought this was probably true.
5.
Mr Xi then said he would like to make several points. The first was that the problem of greatest concern to manufacturers in Hong Kong was the position of Hong Kong. The position was in fact very clear. He had talked about it with Sir Murray after the latter's visit to Peking; he had also said something about it in a written statement to the press in Hong Kong. People in Hong Kong could set their minds at ease;
there should be no doubt about this. China's
policy was consistent; whatever was done would not go contrary to this principle. Secondly, in his personal view, the 1980s would be a troubled time for the world. But the Far East, and in particular Hong Kong, would be quite stable. Because Hong Kong was stable there would be more investment from Taiwan and other places in the Far East. The business generated by investors would be advantageous to Hong Kong and to China. Hong Kong would increasingly become an international market because investors would know that there was strong backing for Hong Kong from China. Thirdly, the prospects for mutual co- operation were very bright. This would stretch over many, years and be wide-ranging (e.g. telecommunications, railways, highways, shipping, air transport and the exploitation of coal in Guizhou which would solve the energy problems of Hong Kong and Guangdong). If there was not co-operation Hong Kong would soon reach the limits of economic expansion; it could only
flourish for a short time
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/contd.
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