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See the Jonit Statenet issued i felipi

Sest

British Embassy

Enta

See

No 1 Ichiban-Cho Chiyoda-ku, Tokyo Mr. Hounge is

Telex J22755 (A/B PRODROME)

Telephone 205-5511

R J T McLaren Esq Political Adviser Hong Kong

Deis Rubin,

Mr. Maris

Your reference

Our reference

Date 25 February 1983

HKK 04015

SIR Y K KAN: JAPAN AND THE FUTURE OF HONG KONG *K

1.

KONG

( MAR 1983

Afab.

I ought to let you know that I had a meating yesterday Sir Y K Kan who is in Tokyo this week in his Hong Kong Trade Development Council capacity (the HKTDC are arranging a large fashion show to promote Hong Kong exports). He was accompanied inter alia by Len Denning, Executive Director of the HKTDC, other representatives of the HKTDC and Hilton Cheong-Leen, Chairman of the Hong Kong Urban Council. In the Ambassador's absence on tour, I saw Sir Y K Kan and his party. Apart from brief discussion of Hong Kong's GSP concerns here, the majority of our conversation concentrated on the future of Hong Kong.

Relations

2. I told Sir Y K of the considerable interest being expressed here by Japanese businessmen about the future of Hong Kong. I said that although we did not trail our coats on Hong Kong, our line when asked about this subject was to indicate that whatever the course of negotiations between the British and Chinese Governments about the future of Hong Kong (and to the details of which we were not privy), both Governments were committed to maintaining the stability and prosperity of Hong Kong. between the UK and China are better than they have been for a long time and against this background, we were optimistic that reasonable solutions would be found. The fact remained that 1997 was still a long way off and we knew that a number of Japanese companies had reviewed their prospects in Hong Kong and concluded that there was a good deal of business still to be done in that market. Sir Y K endorsed this line and emphasised that he himself had been told by leading Chinese Government representatives last autumn in the course of a visit to China that the Chinese intended to preserve Hong Kong's prosperity and stability, as well as maintaining foreign investment, after 1997.

3. We agreed that Japanese reactions to the future of Hong Kong were restricted solely to the economic front. Unlike the United States, the Japanese would not express an interest in the political future of Hong Kong (as Shultz had done recently) other than for its implications for Japanese companies doing business there. Japan had its own relationship to develop with China and

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