CONFIDENTIAL
BACKGROUND
FUTURE OF HONG KONG
I. Sir Y K Pao last called on Mr Luce in November 1984. He called
on the Prime Minister on 30 April this year (principally to advocate his inclusion in one or more of the events during Premier Zhao's
visit. He will attend the Prime Minister's dinner and the Lord
Mayor's lunch for Zhao, on 3 and 4 June respectively).
2.
After an intense battle lasting over four weeks, Sir Y K Pao
gained control of the Wheelock Marden Group in March this year. He
defeated Singapore based financier Mr Kheo Teck Puat. Sir Y K Pao's final offer values the Wheelock Marden group at about Hong Kong $2.5
billion - 23% higher than the original takeover offer. This has
been seen as an expression of confidence in Hong Kong and its
future.
3. Sir Y K has a specific and helpful interest in UK/China trade.
Following a meeting he had with the Prime Minister in November last
year he wrote to her about a Chinese proposal to build a steel mill
at Ningbo on the East Coast of China. A consortium of UK companies led by Davy McKee has since been established to pursue the project, with support from HMG. Sir Y K has been closely involved and
arranged for Davy McKee to hold discussions in mid-April in Hong
Kong with a Vice Minister from the Chinese Ministry of Metallurgy,
the Mayor of Ningbo and the Deputy Governor of Zhejiang province.
Mr Roger Kingdon, Chairman of Davy McKee, who accompanied Lord Young to China has also recently entertained a delegation from the
Ministry of Metallurgy, led by a Vice Minister.
CONSTITUTIONAL DEVELOPMENT
4.
During a call on Sir Percy Cradock on 30 April, Sir YK
expressed the view, quite forcefully, that movement towards
representative government in Hong Kong was too fast: he indicated
that this was the Chinese view. This theme is now emerging from a number of informal Chinese sources, and Zhao may raise it during his
visit.
5. The present position is that the first (indirect) elections to
LEGCO will be held this September, to select 24 of the Council's 56
CONFIDENTIAL