MTHAFL

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CONFIDENTIAL

BACKGROUND

1.

M Bariani visited Hong Kong in July 1987 as part of a tour

which included Malaysia and Indonesia. On his return to France he

announced that, with 1997 in mind, a certain number of Chinese managers working in French companies in Hong Kong were worried about the future of the territory. He added that it was desirable that France should be able to grant these people French nationality if

they wished. Our Ambassador in Paris took up these remarks, pointing out the damaging effect they could have on confidence.

Bariani took the point. He said he understood the importance of

maintaining confidence but he had had to respond to pressure put on him by French firms in Hong Kong who had about 100 local Chinese

managers. The firms were worried that in conditions of uncertainty

some of their best and most expensively trained people would leave

for places such as Australia and the USA. His offer had been designed to provide reassurances so that skilled workers would be

able to continue working for French firms in Hong Kong. While there

is no need to raise this specific point again, it would be worth

reiterating in general terms our concern about the overriding need

not to weaken confidence in Hong Kong.

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