JAYAEV (3)

dynamic society where people wish to live, now and beyond 1997.

Good progress so far but much work remains to be done.

Basic Law

Drafting of Basic Law is progressing well. Have had fruitful

behind-the-scenes dialogue with Chinese.

Some problems remain. But Chinese officials have repeatedly

stated that draft is open to further amendment.

Provisions on political structure are subject of intense debate

in Hong Kong. Hope Hong Kong people will be able to agree on

consensus formula which commands widest support and confidence.

Confidence in Hong Kong

Confidence in Hong Kong's future is holding up well but remains

fragile. Chinese recognise the importance of their role. Economy

still booming 6-7% growth estimated for 1988 (13% in 1987 and 11% in

1986) with investment levels and other indicators positive.

Emigration

Emigration, particularly of professionals, is a real concern. But no question of preventing people from leaving if they wish.

Would be concerned if Hong Kong talent became specific target for

immigration policies of third countries, as this would imply lack of

confidence in Hong Kong's future.

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