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(B) RULE BY LEGCO. LU PING SAID THAT SOME PEOPLE ON THE CHINESE SIDE THOUGHT THAT ACCOUNTABILITY MEANT THAT LEGCO WOULD PULE EXCO. GOVERNMENT IN HONG KONG MUST BE STRONG AND EFFICIENT. WE AGREED. GOVERNMENT MUST HOWEVER ALSO BE RESPONSIVE. THE POPULATION NEEDED
TO KNOW THAT THEY HAD A STAKE IN IT. LU SAID THE 'MASSES'' ONLY WANTED MONEY AND SOCIAL STABILITY. WE DISPUTED THIS BY REFERENCE TO POPULAR INTEREST IN ISSUES OF E.G. TRANSPORT AND HOUSING MANAGEMENT. THIS WAS POLITICS, HOWEVER HUMBLE. FURTHERMORE HONG KONG WORKERS WOULD HAVE NO SECURITY IF THE MANAGERIAL ELEMENT DEPENDED ON SAFEGUARDING HONG KONG'S COMMUICATIONS, FREEDOM OF MOVEMENT AND POSITION IN THE GATT. ADDITIONALLY IN A COMPLEX ECONOMY IT WAS
IMPORTANT TO HAVE IN THE GOVERNMENT PEOPLE WHO UNDERSTOOD IT.
(C) ADMINISTRATION. THE CS EXPLAINED HONG KONG'S POLICY OF PREPARING SUITABLE LOCAL CIVIL SERVANTS OF PROVEN TALENT TO ASSUME THE
MAJOR JOBS AS PRINCIPAL OFFICIALS' FOPESEEN FOR THE SAR IN
THE JOINT DECLARATION. THE ADMINISTRATION WAS DETERMINED TO DO A
GOOD JOB BEFORE 1997 AND WAS PRESSING AHEAD WITH INFRA-STRUCTURAL
PROJECTS, HOUSING AND EDUCATION. MEANWHILE THE JOINT DECLARATION WAS STANDING UP WELL TO REALITY. WORK OF GOVERNMENT DEPARTMENTS WAS
CLSOELY GEARED TO IMPLEMENTATION. WE WERE DETERMINED TO DO THIS
EXACTLY.
(D) CROSS BORDER RELATIONS. THE CS DREW ATTENTION TO THE ENORMOUS GROWTH OF PASSENGER TRAFFIC AND THE SATISFACTION OF THE HONG KONG
GOVERNMENT WITH THE MANAGEMENT OF CROSS BORDER RELATIONS. HONG KONG
WOULD BE A CLOSE ECONOMIC PARTNER OF GUANGDONG WELL INTO THE NEXT
CENTURY, TO MUTUAL BENEFNT.
IN RESPONSE TO A QUESTION FROM LU ABOUT HONG KONG'S PLANS FOR A
SECOND AIRPORT, WE POINTED OUT THAT KA TAK WOULD BE SUFFICIENT
FOR MANY YEARS TO COME. REPORTS OF A PLANNED SHENZHEN AIRPORT WERE
OF GREAT INTEREST. THIS MIGHT TAKE CARE OF CERTAIN HONG KONG NEEDS.
BUT WE NEEDED EARLY INFORMATION IF WE WERE TO GET OUR OWIN INFRA-
STRUCTURE DECISIONS RIGHT.
(E) ECONOMY. LU PING EXPRESSED SOME CONCERN ABOUT THE LONGER TERM OUTLOOK FOR THE HONG KONG ECONOMY AND NOTED WITH GLOOM THE
ATTITUDE OF THE U.S. CONGRESS TO THE GSP. CS SAID THAT SHORT TERM
PROSPECTS WERE SATISFACTORY. ANY LONGER TERM UNCERTAINTY
STRENGTHENED THE ARGUMENT FOR RESOLVING HONG KONG 'S FUTURE
POSITION IN THE GATT NOW (THE PEKING EXPERT TALKS HAD BEEN MOST
USEFUL). SUCCESS ON THIS FRONT AND PROGRESS ON OTHER PRACTICAL
MATTERS WOULDENCOURAGE LOCAL CONFIDENCE. WE ALSO EMPHASISED HONG
KONG'S RECORD OF RAPID ADJUSTMENT: AND THE FACT THAT WE SHOULD FACE
ANY NEW DETERIORATION OF THE WORLD ECONOMIC CLIMATE WITH BALANCED
BOOKS. CS UNDERLINED KEY IMPORTANCE HONG KONG'S ROLE AS PART OF A
GLOBAL BANKING SYSTEM.
CONFIDENTIAL
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