CONFIDENTIAL
IN HOND KONG OF A LARGE AND INTERNATIONALLY ORIENTED FINANCIAL
CENTRE BRINGS WITH IT BOTH ECONOMIC ADVANTAGES AND PISH EXPOSUDE
TO RISK. FRAUD ON A MASSIVE SCALE HAS TIWCE BROUGHT BANKS NEAR
TO FAILURE AND FORCED THE GOVERNMENT TO TAKE THEM OVER. THE EXISTENCE OF LARGE RESERVES IN THE EXCHANGE FUND HAS PROVED A STRONG SAFEGUARD IN TIMES OF CRISIS. WITHOUT THE LINK WITH THE U.S. DOLLAR THERE WOULD HAVE BEEN HIGH VOLATILITY IN THE EXCHANGE RATE
OF THE HONG KONG DOLLAR.
6. CONFIDENCE IN CHINESE INTENTIONS IS STILL BRITTLE. THEIR ACTIONS PARTICULARLY AS REGARDS THE BASIC LAW, WHICH WILL BE HONG KONG'S **CONSTITUTION' AFTER 1997, ARE CLOSELY SCRUTINIZED BY THE HONG KONG PUBLIC. THEY HAVE BEEN GIVEN SOME GOOD MARKS AND SOME BAD: GOOD MARKS FOR INCLUDING A NUMBER OF REPUTABLE HONG KONG FIGURES IN THE BASIC LAW DRAFTING COMMITTEE: BAD MARKS FOR PACKING IT WITH SO MANY AGEING CHINESE MAINLAND FIGURES: GOOD MARKS FOR THE PRACTICAL APPROACH WHICH THEY HAVE ADOPTED IN THE LAND COMMISSION, AND BAD MARKS FOR THEIR FAILURE TO GIVE HONG KONG AIRLINES A FAIR DEAL AT THE FIRST ROUND OF AIR SERVICES TALKS, GOOD MARKS FOR THEIR REFRAINING FROM INTERFERING WITH HONG KONG'S ELECTORAL PROCESS: BAD MARKS FOR THEIR APPARENT UNWILLINGNESS TO CONTEMPLATE FURTHER PROGRESS IN THE DEVELOPMENT OF HONG KONG REPRESENTATIVE AND GOVERNMENTAL SYSTEM. THE NEXT ROUND OF AIR SERVICE TALKS IN NOVEMBER ARE WIDELY REGARDED AS A POLITICAL TEST OF GOOD INTENTIONS GOING FAR BEYOND THE QUESTIONS ON THE AGENDA.
7. IN CONSEQUENCE THERE ARE STILL THOSE WHO PLAN TO ENJOY THE NEXT TEN YEARS AND THEN LEAVE, AND A MUCH LARGER NUMBER WHO ARE ADOPTING A WAIT AND SEE ATTITUDE'. THE MAJORITY OF COURSE WILL HAVE TO STAY AND THERE ARE ON THE OTHER SIDE PLENTY OF PEOPLE PREPARED TO DO THEIR BEST TO MAKE THE ARRANGEMENTS LAID DOWN IN THE JOINT DECLARATION WORK.
B. THE POLITICAL SCENE IN HONG KONG IS VERY DIFFERENT FROM THAT ELSEWHERE. WITH THE SIGNATURE OF THE JOINT DECLARATION THE RISKS OF POLARISATION BETWEEN THE LEFT (COMMUNIST AND PEKING SUPPORTERS) AND THE RIGHT (SUPPORTERS OF TAIWAN) HAVE BEEN MUCH REDUCED. THE JOINT DECLARATION HAS FIRMLY COMMITTED THE LEFT TO THE SUPPORT OF THE EXISTING SYSTEM AND THE RIGHT WHICH HAS LITTLE INFLUENCE PLAYS IT COOL. CHINA'S INFLUENCE OVER COMMUNITY LEADERS GENERALLY IS SOMEWHAT STRONGER THAN A YEAR AGO. THE POLITICAL ASSOCIATIONS WHICH SPROUTED DURING THE ELECTIONS EARLIER THIS YEAR HAS NOT PROSPERED. THE SPECIAL INTEREST GROUPS FOR PRESSURE GROUPS) ARE STILL SMALL. THEY ARE VOCAL, GENERALLY WELL-INTENTIONED AND GIVEN MUCH MEDIA COVERAGE BUT DO NOT CARRY GREAT WEIGHT IN THE COMMUNITY. IN THE RECENT NG MING YUM INCIDENT SOME OF THEM WHO HAD SOUGHT TO EXPLOIT IT WERE ROUNDLY DENOUNCED BY MORE TRADITIONAL ELEMENTS IN THE NEW TERRITORIES. THEY WILL NEVERTHELESS CONTINUE TO BE A FEATURE (AND BY AND LARGE A HEALTHY FEATURE) ON THE
POLITICAL SCENE.
SPA!
CONR
19.