investment for those who wish to spread their risks and find
cheap labour. Significant investment flows have also gone to Canada, Australia and the United States, which have been making considerable efforts to attract Hong Kong investors.
Hong Kong investment in the UK
7. By comparison, only a small proportion of investment has come to the UK. In 1987, the book value of manufacturing investment from Hong Kong in the UK was only £82 million, compared to £1.9 billion from Japan. There are only ten Hong Kong manufacturing units in the UK, compared with 152 from Japan. What manufacturing investment there is has been mainly concentrated in textiles, clothing and
electronics.
Political Constraints
8.
HMG is committed under the Sino-British Joint
Declaration to maintain the stability and prosperity of Hong Kong. Because of our responsibility for Hong Kong, we have a special duty not to do anything which could undermine confidence in the territory. A smooth transfer of Government in 1997 depends to a great extent on maintaining a high level of goodwill and trust between the UK and China in the intervening period.
9. However, provided that appropriate restraint is exercised, we consider that some relaxation of the existing COP guidelines COP (2) 85 would be justified and that UK organisations should be free to adopt a somewhat higher profile in attracting investment than has been the case in the recent past. The Hong Kong Government would not object to this, provided inward investment promotion is based on purely commercial considerations and does not have any
political overtones.
MAIAAJ/3