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From the Private Secretary
SECRET AND PERSONAL
MON
10 DOWNING STREET
LONDON SW1A 2AA
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M Milaan
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28 June 1990
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PRIME MINISTER'S MEETING WITH THE
_GOVERNOR OF HONG KONG
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Trease 10/7
The Prime Minister had a good talk, lasting about an hour, with the Governor of Hong Kong this evening.
The Prime Minister congratulated the Governor on having achieved a turn-round in the situation in Hong Kong. She did not quite know how he had done it, but things clearly were much better. The Governor said that the nationality package had been a tremendous boost to morale. People in Hong Kong understood that it had caused the Government considerable trouble and they I appreciated the fact that the Government had put itself out. "Prime Minister said that the question of direct elections no
longer seemed to present major problems. The Governor said that the issue was out of the way and regarded by people in Hong Kong as settled.
The
The Prime Minister asked about confidence in Hong Kong. The Governor said that money was still coming in. The link with the US $ had been vital to preserving financial confidence last year. The US decision to continue MFN status for China had also helped. On the other hand, people were leaving Hong Kong and that would inevitably go on. But the nationality package should succeed in anchoring the key people.
The Prime Minister said it was difficult to tell where matters stood in China. The Governor agreed that an unresolved power struggle was in progress, and there was unlikely to be any result until after Deng Xiaoping left the scene. Sir Y K Pao had recently seen Deng and would be able to brief the Prime Minister when he called on her the following day. Feeling in Hong Kong about the events in Tianaman Square continued to run high, and 100,000 people had turned out for a peaceful demonstration to mark the anniversary.
The Governor referred to the major infrastructure projects being undertaken in Hong Kong. These should ensure that Hong Kong remained the gateway to China after 1997. The Prime Minister asked whether British firms were getting a fair share of the work. The Governor said that a lot of British firms were involved, particularly in financial and engineering consultancies. A consortium including Trafalgar House, Costains.
SECRET AND PERSONAL
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