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4.
SLUMP OF HK DOLLAR:
On 18 May, the HK dollar plunged to an all-time low of $7.003 against the greenback. The sustained weakness of the local unit was commented on extensively by the Chinese-language press, with the majority putting the blame on uncertainty over HK's future. The dollar rebounded to close the week at $6.93 against the greenback after the HK Association of Banks raised prime rate by two percentage points to 13.5 pc on Friday.
Speaking to newsmen on his return from a one-day trip to Macau on 19 May, the Governor again urged residents not to be unduly gloomy about the sagging value of the HK dollar. He said fluctuations were inevitable in an open economy like HK's. He believed there was an underlying strength in the local economy, there was no reason why
this should not be reflected in the exchange rate later.
Earlier, the Secretary for Monetary Affairs, Mr. Douglas Blye, urged the public and the banking industry to have faith in the local currency which he said was undervalued in the light of the territory's present economic situation.
5.
NEW DIRECTOR OF XINHUA:
China officially announced on 19 May that the former first Secretary of Jiangsu Provincial Party Committee, Mr. Xu Jiatun, had been appointed First Director of the Hong Kong branch of Xinhua. A Reuters despatch quoted diplomatic sources as saying that the posting of Mr. Xu, the highest Chinese Government official ever to be stationed in HK, showed that HK's status was delicate. The fact that Mr. Xu did not come from Guangdong indicated that Beijing wished to actively participate in HK's activities. Mr. Xu's views would be consulted in the course of the Sino-British negotiations on 1997, but he would not play the role of formulating policies. His main task was to strengthen HK people's confidence in Beijing. The Express meanwhile quoted observers as saying the posting of a high-ranking central Government official to HK could be seen as Beijing's move to pave the way for turning the territory into a Special Administration Region. Sources close to left-wingers believed that certain China-controlled organisations here would see some changes.
after Mr. Xu's arrival.
A columnist of the right-wing Hong Kong Times said China's strongman, Mr. Deng Xiaoping, had decided to send Mr. Xu to HK because of his experience in administering Shanghai, which was in many ways similar to HK before the Communist takeover. Beijing's intention to handle capitalists here was very clear since Mr. Xu's entourage included a few of his colleagues in Shanghai.
The Oriental Daily News later quoted the chief editor of Xinhua here, Mr. Li Chong, as saying Mr. Xu Jiatun would come to HK by himself. Mr. Xu would re-deploy staff according to needs, but no immediate staff changes were envisaged. Mr. Li also claimed that Beijing attached importance to views of HK residents on the 1997 question, citing as an example the continuous flow of local groups to Beijing to express their views.
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