PESTRICTED,
A TOKYO
TO TELELETIER FCO TELELETTER NFR
OF 16071OZ APRIL 91
RESTRICTED
A
FROM ROBERT COOPER, TOKYO
NFR DATED 16 APRIL 1991
TO JONATHAN POWELL, POLICY PLANNING STAFF, FCO
JAPAN/HONG KONG
1. DURING OUR PLANNING TALKS YESTERDAY, YUKIO SATO GAVE AN INTERESTING PRESENTATION ON HIS THINKING ABOUT HONG KONG. HONG KONG WAS IMPORTANT TO JAPAN BECAUSE IT REPRESENTED THE BEST HOPE OF MODERNISING CHINA, BEGINNING WITH THE SOUTH. THE TROUBLE WITH UK POLICY AT THE MOMENT WAS THAT IT WAS RUN BY PEOPLE WHO PLANNED TO LEAVE HONG KONG AFTER 1997 AT LEAST THIS WAS HOW LYDIA DUNN FOR EXAMPLE WAS PERCEIVED. WE SHOULD BE LISTENING INSTEAD TO THOSE WHO WERE COMMITTED TO STAYING EN VINCENT LO. THEY SAW THEIR LONG TERM INTEREST AS BEING TO ACCOMMODATE PEKING AND WERE IN TOUCH WITH IT.
2. THEY WAY TO PROTECT HONG KONG WAS TO PRESERVE ITS USEFULNESS TO THE CHINESE. OUR FOCUS SHOULD THEREFORE BE ON PRESERVING HONG KONG'S PROSPERITY AND ECONOMIC FREEDOMS. ISSUES SHUC AS DEMOCRACY AND A BILL OF RIGHTS WERE SECONDARY. THEY WERE OF CONCERN TO THE ENGLISH-SPEAKING ELITE BUT MATTERED LESS TO THE CHINESE WHO WOULD REMAIN IN THE TERRITORY AFTER 1997. APART FROM THE FACT THAT THEY BOUGHT CONFRONTATION WITH PEKING, SATO'S PERSONAL VIEW WAS THAT TOO MUCH DEMOCRACY MIGHT EVEN BE A BAD THING. HONG KONG HAD PROSPERED UNDER A SYSTEM WHICH COMBINED SEMI-DEMOCRACY WITH LIMITED WELFARE PROVISIONS, THUS ENABLING TAX RATES TO BE KEPT LOW. DEMOCRACY COULD BRING A LOCAL VOICE CALLING (FOR EXAMPLE) FOR INCREASED PUBLIC EXPENDITURE, AND THIS MIGHT DAMAGE INVESTOR CONFIDENCE. WAS IT A SURPRISE THAT THE CHINESE DISTRUSTED US WHEN WE WERE PRESSING ON THEM A SYSTEM WE HAD GONE WITHOUT WHILE WE RULED HONG KONG.
3.
NAKAYAMA'S STRONG PITCH IN SUPPORT OF HONG KONG DURING HIS VISIT TO CHINA HAD THEREFORE EMPHASISED ECONOMIC FREEDOM (SATO HAD BRIEEED HIM). THIS WAS AN APPROACH TO WHICH THE CHINESE RESPOND WELL. HE WAS NOT CONVINCED IT WAS SENSIBLE TO PRESS FOR
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