RESTRICTED
TOP COPY
GR 500
RESTRICTED
FM HONG KONG 083635Z JUN 83
TO ROUTINE FCO
TELEGRAM NUMBER 775 OF 8 JUNE
AND TO ROUTINE PEKING
(79)
MKK040/2
RECEIVED IN KLOSTKY NO. 51
13 JUN 1983
DESK 0544.
INFO ROUTINE HONG KONG GOVERNMENT OFFICE LONDON
INDEX
PA
DISTRY ton Tøken
FUTURE OF HONG KONG: PRESS COVERAGE.
THE CONTINUED DECLINE OF THE HONG KONG DOLLAR TODAY ATTRACTED PROMINENT COVERAGE IN MOST PAPERS.
2. A CONTRIBUTOR TO THE COMMUNIST WEN WEI PO WARNED THE HONG
KONG AND BRITISH GOVERNMENTS AGAINST SPREADING RUMOURS OF A
**CRISIS OF CONFIDENCE' TO EXPLAIN THE SLIDE OF THE HONG KONG
DOLLAR. SUCH RUMOURS WOULD ONLY UNDERMINE HONG KONG'S PROSPERITY
AND STABILITY. THE CONTRIBUTOR ARGUED THAT THE CHINESE GOVERNMENT
HAD ALREADY ALLAYED LOCAL RESIDENTS' WORRIES ABOUT THE FUTURE
BY REPEATING ASSURANCES ON THE TERRITORY'S PROSPERITY AND
STABILITY AND BY ANNOUNCING SPECIFIC MEASURES. FOR EXAMPLE, PEKING
HAD ANNOUNCED ITS PLANS TO INVEST IN LOCAL INDUSTRY. BY CONTRAST,
THE BRITISH AND HONG KONG GOVERNMENTS HAD FAILED TO DO ANYTHING. THE GOVERNMENT HAD REFUSED TO WAIVE THE WITHHOLDING TAX ON HONG
KONG DOLLAR DEPOSITS AND THERE HAD BEEN MASSIVE SALES OF THE LOCAL
CURRENCY FOR STERLING ON THE LONDON MARKET. THE LEFT-INCLINED
TIN TIN DAILY NEWS SIMILARLY HELD THAT THE FALL IN THE HONG KONG
DOLLAR HAD NOTHING TO DO WITH A CRISIS OF CONFIDENCE. THE HONG
KONG GOVERNMENT WOULD BE ABLE TO TURN THE TIDE PROVIDED IT MADE
EFFORTS TO CURB GALLOPING INFLATION.
3. TWO INDEPENDENT NEWSPAPERS, THE FINANCIAL DAILY AND THE EXPRESS ARGUED THAT THE CHINESE, BRITISH AND HONG KONG GOVERNMENTS
ALL HAD A RESPONSIBILITY TO TAKE DETERMINED AND SINCERE ACTION
TO HALT THE DOLLAR'S DECLINE. THE EXPRESS TOOK THE CHINESE
GOVERNMENT TO TASK FOR PURCHASING LARGE QUANTITIES OF US CURRENCY, THEREBY INCREASING THE PRESSURE ON THE LOCAL UNIT.
4. THE HONG KONG DAILY NEWS (INDEPENDENT RIGHT WING) CARRIED AN EDITORIAL WHICH ARGUED THAT THE LOCAL CURRENCY HIT RECORD LOWS EVERY TIME PEKING SPOKE OF RECOVERING SOVEREIGNTY OVER HONG
RESTRICTED
/ KONG.