CODE 18-77
SUYAKV
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Reference..
h+P.A. (MACAO)
NC 3/1
897
Mr Seaton, FED
OECD VISIT TO MACAO
HKB 02014
1. You asked for comments on John Gray's letter of 16 October to Robert Cooper.
2. The Governor of Macao presents the Portuguese reaction to the June events in Peking as more coherent than appeared to be the case at the time. The next Sino-Portuguese JLG meeting had been scheduled for 31 July in Macao. There were conflicting reports of postponement, and apparent indecision at a high level in the Portuguese Government about how to deal with the Chinese. end the JLG went ahead (in Lisbon, rather than Macao) and furthermore, was preceeded by "informal talks" in Lisbon on 17-18 July. Since then the Portuguese have pursued "normalisation" pretty whole-heartedly.
3.
In the
The
The Chinese have sought to contrast the cooperative attitude of the Portuguese with our supposedly more disruptive approach. comparison has been made explicitly in the communist Hong Kong press, the outgoing Portuguese Ambassador to Peking was given an unusually high-level farewell in August, and in early October, the Governor was told by Li Peng that Macao acted as a link between Portugal and China and contributed to the development of good relations (by implication, in a way that Hong Kong did not). However, as the Tiananmen events have become more distant, the Chinese have begun to revert to their previous caution and inflexibility in dealing with Macao, reflecting the limited importance they attach to Macao as compared with Hong Kong. The fact is, of course, that the higher international profile of Hong Kong and greater sensitivity there about Chinese rule mean that we are juggling with a much more complex situation than the Portuguese.
4. I note that the Governor of Macao has glossed over the extent of Macao's economic dependence upon Hong Kong. The enclave's major industry remains gambling and its associated service trades, the vast majority of punters being Hong Kong day-trippers. One of the largest projects under way in Macao is the new race-track, established by Taiwanese interests who are considered shady even by Macao standards. Macao also acts as an offshore base for a number of trades which Hong Kong is increasingly too fastidious to handle copyright piracy, vice, firework manufacture and unlicensed dentistry are examples which spring to mind. For all the ambitious talk of industrial estates and airports, it seems unlikely that Macao, unable to compete with either Hong Kong's economic sophistication or China's cheap land and labour, has the capacity to break out of its existing economic niche.
Pacholes lover
N Cannon
Hong Kong Department WH303 270 2657
3 November 1989
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