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British Embassy
No 1 Ichiban-Cho Chiyoda-ku Tokyo
Telex J22755 (A/B PRODROME)
Telephone 265-5511
Your reference
Mr N Cannon
Our reference
HKD
FCO
HKC/21
Date
14 August 1989
11
!
Year Cannon,
ECONOMIC RELATIONS BETWEEN JAPAN AND HONG KONG
1
The Ambassador's letter to David Gillmore of 4 December 1987 described in some detail the growing commitment of Japanese firms to other dynamic East Asian economies. Since then the mutual reliance of East Asian and Japanese economies has continued to strengthen, very much along the lines set out in that letter: investment in Asia has boomed, with simple assembly focusing on the "potential NIES" such as Thailand, Malaysia, and Indonesia, and higher technology investment targeted on the NIES themselves. A recent "Economist" survey charted this shift very well. Seen from a particularly British perspective our interests are most urgently engaged by the way the Japanese approach Hong Kong. Recent events in China have forced Japanese firms to look at their activities in the territory, with potentially damaging implications for wider confidence in Hong Kong's future if they waver in their commitments. The Japanese government has been giving some thought to how far steps can be taken to maintain "Hong Kong's importance as a centre of political and economic stability" as Foreign Minister Mitsuz ait when he met the Secretary of State in Paris on 14 ly. After exchanges of telegrams with Hong Kong, we have be actively encouraging them to do so, as you will have seen eg, from the report of the Ambassador's discussions with Tanino (Director General for Asia) and Murata and Fujii (outgoing PUS and Deputy PUS at the MFA). In this light your letter of 26 April asking us to take a look at Hong Kong-Japan economic relations was timely. What follows is the result of soundings made in Tokyo, though colleagues in Hong Kong may wish to chip in if our perspective seems excessively Japanese. It is intended as background for consideration of our policy objectives vis a vis Japan as far as Hong Kong is concerned.
1
An Unbalanced Economic Relationship
Serious imblances characterise both the trading relationship and the scale of respective investment. An appended statistical annex quantifies this. Japan's trade surplus with Hong Kong
2.
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