COZAIR(2)
of confidence about continuity of scheduled air services after 1997.
Process of separation is a technical and legal matter, which should leave neither party worse off than before. Hope that rapid progress can be made on HK/Australia ASA.
(If necessary)
Basic Law
Drafting of Basic Law is progressing well. Have had fruitful
behind-the-scenes dialogue with Chinese.
Second draft, published in late February, contains substantial improvements. Chinese officials have emphasised that revised draft is also open to further amendment in light of views collected in
second round of consultations.
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.