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