GR 750
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FM HONG KONG 0408202 MAR 33
TO IMMEDIATE FCO
TELEGRAM NUMBER 293 OF 4 MARCH
INFO IMMEDIATE PEKING
HKK 090/4
RECEIVED IN REGISTRY
16 JUN 1983
DESK OFFICER
INDEX
G
YOUR TELEGRAM 187 OF 1 MARCH. THE FUTURE
PA
REGISTRY
Action Takén
SM
(8)
IN ADVANCE OF MY VISIT IT MAY BE USEFUL FOR YOU TO HAVE AN
ASSESSMENT OF THE SITUATION HERE AT THE PRESENT TIME. THE GENERAL
ATMOSPHERE HAS BECOME CALMER. AS TIME GOES BY THE IMPACT MADE BY
THE CHINESE PROPAGANDA CAMPAIGN HAS LESSENED: BECAUSE OF
FAMILIARITY WITH ITS THEMES HONG KONG PEOPLE ARE DEVELOPING A
DEGREE OF IMMUNITY TO IT. WE HAVE GOT THROUGH THE CHINESE NEW YEAR
AND THE BUDGET REASONABLY WELL. UNDERSTANDABLY THERE IS STILL A
GREAT DEAL OF INTEREST ABOUT THE FUTURE BUT THE CONCERN (IF NOT
ACTUAL ALARM) WHICH WAS SO EVIDENT IN THE LAST QUARTER
OF 1982 HAS GIVEN WAY TO AN INCREASING RECOGNITION THAT THE
TALKS ARE GOING SLOWLY, IT WILL TAKE A LONG TIME TO RESOLVE THIS
ISSUE AND THAT THERE WILL BE CHANGES. EVEN SO, IT IS STILL A VERY
SENSITIVE ISSUE AND CONCERN IS ONLY JUST BELOW THE SURFACE. IT
WILL BE REFUELLED BY FURTHER VISITS BY DELEGATIONS AND OTHERS TO CHINA, BY ANY PUBLIC MOVE BY THE CHINESE AND ALSO BY INDIVIDUAL
EVENTS EVEN THOUGH THEY MAY NOT BE IMMEDIATELY CONNECTED WITH THE
FUTURE. ANXIETY, OR WORSE, WOULD QUICKLY ARISE IF THERE WAS SOME UNEXPECTED DEVELOPMENT OR DISCLOSURE BY THE CHINESE.
2. THE BUDGET HAS GONE WELL AND THERE APPEARS TO BE MORE OPTIMISM
ABOUT. A RECENT SURVEY OF 200 COMPANIES OF ORDERS ON HAND IN
DECEMBER INDICATED A PICK UP IN BUSINESS AND THE POSSIBILITY
THAT THE U.S. ECONOMY MAY BE BEGINNING TO MOVE UP AGAIN HAS HELPED.
IMPORTS OF RAW MATERIALS INCREASED IN JANUARY COMPARED WITH A
YEAR EARLIER. THE GENERAL CLIMATE HAS ALSO BEEN IMPROVED BY
THE FACT THAT PROPERTY PRICES SEEM TO BE SETTLING. AGAINST THIS,
UNEMPLOYMENT AND UNDER EMPLOYMENT HAVE RISEN SOMEWHAT IN RECENT
MONTHS. FOR THE TIME BEING IT IS THESE FACTORS WHICH LOOM LARGE
AMONGST THE ITEMS OF PUBLIC CONCERN.
WITH
3. PROBLEMS REMAIN WITH VARIOUS FINANCIAL INSTITUTIONS ESPECIALLY
DTC'S AND, ALTHOUGH THE RESCUE OF CARRIAN HAS BEEN LARGELY
DISCOUNTED, FURTHER CASES WILL UNDOUBTEDLY COME TO LIGHT WHICH WILL
GIVE RISE TO CONCERN AND AFFECT CONFIDENCE.
4. STATISTICS OF THE GROWTH OF TOTAL DEPOSITS IN 1932 SUGGEST
THERE WAS A SUBSTANTIAL INFLUX OF MONEY INTO HONG KONG, BUT
INVESTMENT BY HONG KONG PEOPLE ABROAD HAS CONTINUED, POSSIBLY
ON A LARGER SCALE THAN BEFORE. PARAGRAPHS 28-32 OF THE BUDGET SPEECH
COPIES OF WHICH ARE ALREADY WITH YOU COVER THIS SUBJECT.
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5. DESPITE