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BACKGROUND
CONFIDENTIAL
These
1. In November 1989 the Hungarians made a number of informal approaches in London, Budapest and Peking about the possibility of a relaxation of the Hong Kong Government's restrictions on travel to Hong Kong by Hungarian businessmen and of setting up a Trade Office or Consulate in Hong Kong in the not too distant future. approaches appeared to be exploratory in nature. that stage stressed that they did not have a specific proposal in mind. They also indicated that there had been no discussion with the Chinese. Since December there has not been any further
discussion of the topic.
The Hungarians at
2. The Hong Kong Government reviewed their policy towards the granting of visas to Soviet and East European nationals in 1989 and decided to relax it in certain respects as far as visits for business and conference purposes are concerned. Hong Kong's visa policy up to now has been dictated largely by perceived Chinese sensitivities about a Soviet and East European presence in Hong Kong, which would be used for intelligence activities directed against China. HKG are now further reviewing their policy and are seeking advice on the threat now posed by the intelligence services of the various Eastern European countries.
The resultant restrictive visa policy has meant that Hong Kong has suffered certain economic penalties. The reason for liberalising the regime is to try to increase Hong Kong's trade and investment links with East European countries and to strengthen Hong
The Hong Kong Kong's role as an international business centre. Government do not exclude the possibility of some form of Hungarian trade representation in due course if bilateral trade does develop. But they consider that in the meantime Hong Kong would have nothing to gain and potentially a good deal to lose by rushing matters.
CONFIDENTIAL