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GR 600
SECRET
FM PEKING 119703Z MAR 82
SECRET
Hire
TO PRIORITY FCO
TELEGRAM NUMBER 149 OF 11 MARCH
на живо
очорт
INFO PRIORITY HONG KONG (PERSONAL FOR GOVERNOR)**
FOR
1/ Pho2013
by whom
109
the F-S.? With
the si apreneur?
or by Gv Mu
FINANCIAL SECRETARY'S CALL ON GU MU? FUTURE OF HONG KONG
MICHAEL PÄLLISEK
For audion
دارال
Dp teply t Ps / eu s pl
1. THE QUESTION OF THE FUTURE WAS RAISED WHEN THE FS CALLED ON GU MU ON 10 MARCH. FS SAID THAT HIS POSITION MADE HIM PARTICULARLY AWARE OF THE IMPORTANCE TO HONG KONG'S FUTURE OF BANKING, THE VALUE OF THE HONG KONG DOLLAR AND ITS CONVERTIBILITY. HE WAS AWARE OF DENG XIAOPING'S REMARKS TO THE GOVERNOR IN 1979 AND ZHAO ZIYANG'S HELPFUL COMMENTS TO THE LPS IN JANUARY. AS FS, HIS NARROW CONCERN WAS THE STRENGTH OF THE HONG KONG DOLLAR. THE SHADOW OF 1997 WAS CAST A LONG WAY FORWARD. DOUBTS ABOUT THE FUTURE COULD LEAD TO A SUDDEN WEAKENING OF THE DOLLAR. THERE HAD BEEN SOME SIGNS OF THIS LAST OCTOBER, THOUGH THE PROBLEM THEN HAD BEEN OVERCOME. BUT WITHIN THE NEXT THREE YEARS OR LESS (UNLESS SOMETHING WAS DONE ABOUT THE FUTURE), LACK OF INVESTOR CONFIDENCE WOULD BE REFLECTED IN A FLOW OF MONEY OUT OF HONG KONG, A CONSEQUENT WEAKENING OF THE DOLLAR AND THEN A GENERAL LACK OF CONFIDENCE IN
THE FUTURE.
2. GU MU SAID THAT HE UNDERSTOOD THE IMPORTANCE OF THIS QUESTION. AS FOR A POLITICAL SOLUTION TO THE HONG KONG PROBLEM, DENG XIAOPING AND ZHAO ZIYANG HAD ALREADY MADE CLEAR CHINA'S POSITION IN TALKS WITH UK VISITORS. GU COULD ONLY ADD ONE MORE ''SENTENCE''. THE CURRENT PROBLEM WAS THAT THE AUTHORITIES IN HONG KONG AND MACAO, AND CHINESE BUSINESSMEN THERE, WERE ANXIOUS TO KNOW WHEN"'CONCRETE MEASURES'' WOULD BE TAKEN, SO THAT THE DOLLAR WOULD BE STABILIZED AND THE OUTFLOW OF CAPITAL HALTED. ''THEY WANTED TO KNOW WHETHER IT WAS POSSIBLE TO TAKE PUBLIC CONCRETE MEASURES SOON''. THE BASIC PRINCIPLES OF A SOLUTION TO THE PROBLEM OF HONG KONG AND MACAO ALREADY EXISTED. CONCRETE MEASURES REMAINED FOR BOTH SIDES TO EXPLORE. CHINA WOULD SEEK AND TAKE INTO FULL CONSIDERATION THE OPINIONS OF PEOPLE IN HONG KONG AND MACAO. IT SHOULD BE POSSIBLE TO FIND A CONCRETE SOLUTION TO BOTH SIDES SATISFACTION IN THE NOT TOO DISTANT FUTURE.
3. FS SAID THAT THIS WAS VERY HELPFUL. IT WAS NOT FOR HIM TO TOUCH ON THE POLITICAL ASPECT OF THE PROBLEM, BUT TO DRAW ATTENTION TO THE MERCURIAL BAHAVIOUR OF INVESTORS IN HONG KONG. IT WAS POSSIBLE THAT LACK OF CONFIDENCE COULD CAUSE MONEY TO POUR OUT OF HONG KONG IN ONE OR TWO YEARS' TIME. OF COURSE NO HONG KONG GOVERNMENT OFFICIAL WOULD SAY ANYTHING PUBLIC TO SUGGEST THAT THERE WAS NOT COMPLETE CONFIDENCE IN THE FUTURE.
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