CUNFIDENTIAL
3
insignificant.
However, the severe blow to confidence,
and the reaction to it by companies and individuals by way
of reduced investment, capital outflow and increased
desire to emigrate, are expected to have an extended
adverse impact on the economy. The ultimate extent of
this impact will depend on how soon confidence is
substantially restored. This in turn hinges on
developments in the political and economic situation in
China and in its diplomatic and commercial relations with
the outside world.
8.
Meanwhile, regular business in Hong Kong is
continuing as usual, albeit with increased uncertainties
in some cases. Existing capacities are being fully
utilised but new ventures, particularly those involving
China, are likely to be handled with greater caution.
9.
Over the longer term, so long as China maintains its open door policies and continues with its economic reforms, it remains a potentially vast market for
foreigners in terms of trade and investment. Given the
adaptability of Hong Kong's entrepreneurs and workforce, its effecient infrastructure and strategic geographical setting, Hong Kong will continue to be the hub serving both China and the Asia-Pacific region as a whole.
CONFIDENTIAL
13.9.1989