CONFIDENTIAL
CONFIDENTIAL
FM HONG KONG
TO DESKBY 070830Z FCO
TELNO 1397
OF 070748Z MAY 91
INFO IMMEDIATE PEKING, WASHINGTON
$3
175645 MDHIAN 5258
TOP COPY Q DIST
Мав
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13 M.
WASHINGTON PLEASE PASS TO HKETO.
MIPT: MFN STATUS FOR CHINA: EFFECT ON HONG KONG: DRAFT LETTER TO SENATORS AND CONGRESSMEN
BEGINS
I AM WRITING TO SEEK YOUR HELP ON THE QUESTION OF THE RENEWAL OF CHINA'S MOST FAVOURED NATION (MFN) STATUS. THIS YEAR, AS IN 1990, THIS IS AN ISSUE OF CRUCIAL IMPORTANCE TO HONG KONG. NO DOUBT YOU WILL BE RECEIVING OTHER REPRESENTATIONS: BUT I WANT TO TELL YOU PERSONALLY OF THE DAMAGE THAT WITHDRAWING, OR MAKING CONDITIONAL THE RENEWAL OF, CHINA'S MFN STATUS WOULD DO TO HONG KONG AND TO AMERICAN BUSINESS INTERESTS HERE.
LIKE OTHER GOVERNMENTS, THE HONG KONG GOVERNMENT SEES ITS MAJOR TASK AS MAINTAINING THE PROSPERITY AND QUALITY OF LIFE OF THE NEARLY 6 MILLION PEOPLE WHO LIVE HERE. TO DO THIS, WE MUST ENSURE THAT THE ECONOMIC DYNAMISM OF THIS UNIQUE CITY IS PRESERVED, UP TO AND BEYOND THE TRANSFER OF SOVEREIGNTY OF CHINA IN 1997. WITHDRAWAL OF CHINA'S MFN STATUS WOULD SEVERELY AFFECT HONG KONG AT A POLITICALLY SENSITIVE TIME.
CHINA IS OUR LARGEST TRADING PARTNER. WE ESTIMATE THAT SOME USD9- 12 BILLION OF OUR TRADE, AND UP TO 43,000 JOBS (ABOUT 1.5 PERCENT OF THE WORK FORCE), COULD BE LOST IF CHINA'S MFN STATUS IS WITHDRAWN. HONG KONG'S GROWTH RATE WOULD BE HALVED. THIS WOULD ADVERSELY AFFECT ALL SECTORS OF OUR ECONOMY AND CONSTITUTE A MAJOR DISINCENTIVE TO THE FUTURE INVESTMENT ON WHICH WE RELY.
TIME IS NOT ON OUR SIDE. WE HAVE ONLY SIX YEARS UNTIL SOVEREIGNTY OVER HONG KONG REVERTS TO CHINA. WE MUST DO EVERYTHING POSSIBLE TO ENSURE THAT, IN 1997, HONG KONG'S CAPITALIST SYSTEM, AND THE RIGHTS AND FREEDOMS ENJOYED BY ITS PEOPLE, ARE STILL FLOURISHING AND HAVE THE STRENGTH TO SURVIVE THE INEVITABLE SHOCK OF THE CHANGE OF SOVEREIGNTY. US WITHDRAWAL OF CHINA'S MFN STATUS COULD BRING ABOUT AN ECONOMIC RECESSION THAT WOULD JEOPARDISE ALL OUR
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