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Kong in September.

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OUR We were determined to fulfil commitment in 1984 White Paper to conduct review on representative government in 1987.

Thorough review; encouraged by scale of public response; fair and genuine; but issues complex.

HKG White Paper in February. Cannot anticipate its contents. But can assure House it will mark historic step forward.

Committed to development of democratic institutions in Hong Kong. But at a pace which reflects wishes of community as a whole and Hong Kong's special circumstances. Requires prudence and judgement.

CONFIDENCE/CONCLUSION

ON MOUNTING (?) EMIGRATION FIGURES : BUT MOUNTING (??) EMIGRA FIGunds: pun

IN

PERSPECTIVE in PERspgeric

People in Hong Kong remain understandably concerned about

future.

But confidence, both locally and internationally, remains strong.

Economy performed exceptionally well in 1987. Exports, employment at record levels. Investment good.

THIS wack's ARRESTS

Mais Weeks AADRE

Worldwide stock markets crash hit HK badly but HKG moved with

i mpressive speed to resolve crisis.

an excellent omen for future.

Constructive role played by PRC

HK is entering unchartered waters in the years to come. Transition will not be easy. But given the good will and mutual self-interest that exist on all sides, every chance that HK can keep to a course which assures its continued stability and prosperity. HMG's policies firmly directed towards that end. Well aware of our responsibilities towards HK: will discharge them to the full.

CONFIDENTIAL

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