D

8

There was no doubt however that the opposition at Westminster

were playing politics. The knew that they would lose a

General Election if they ran on a pro-immigration platform. Additionally this was a poor moment in UK domestic political

terms to attract the necessary attention to the nationality

issue.

13. Lu Ping asked about the state of the Hong Kong economy. He had heard that this was not doing so well.

·

Congressional

There was concern in

action over GSP was bad news. CS said that short term

economic prospects were satisfactory

the longer term, given the state of the North American market. This underlined the need to press ahead in cementing Hong

Kong's position in the GATT. We were glad about the recent

expert talks in Peking. These had gone well1. The subject was one of the highest importance to Hong Kong. Success on this

front would encourage local confidence. Lu nodded. Mr. Boyd said it was ironic, with the negotiations behind us and both sides living up well to the Joint Declaration, that Hong Kong should face this external threat. Comfort could be taken

however from Hong Kong's historical record of rapid adjustment Also we should be entering any new recession with balanced books. to adverse changes in economic climate. / But certainly the GSP

threat had to be vigorously resisted.

14:

CS said he had just seen Senator Danforth.

He had

described Japan's prospective move into the manufacture of

aircraft and aero engines. This looked like another field in

which Japan would kill off a US industrial sector. Danforth had explained the inevitable protectionist repercussions.

The problem was that this all washed off on Hong Kong.

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