CONFIDENTIAL
FM HONG KONG
TO DESKBY 29090OZ FCO
TELNO 2697
OF 290622Z AUGUST 91
INFO PRIORITY PEKING
CONFIDENTIAL
044564
MDHIAN 0468
YOUR TELNO 1483: PRIME MINISTER'S VISIT: PUBLIC MOOD AND ECONOMY.
SUMMARY
1. ANXIETY OVER THE STRAINED STATE OF RELATIONS WITH THE PRC DOMINATED THE PUBLIC MOOD DURING THE FIRST HALF OF THE YEAR. THE AGREEMENT OVER THE MEMORANDUM OF UNDERSTANDING (MOU) WAS GREETED WITH A HUGE SIGH OF RELIEF, PARTICULARLY AMONGST THE BUSINESS COMMUNITY. ALTHOUGH THE COMMUNITY RECOGNISES THE FACT THAT CHINA'S SUPPORT FOR THE AIRPORT HAS BEEN SECURED AT A PRICE IN TERMS OF HONG KONG'S AUTONOMY, THE GENERAL ASSESSMENT IS THAT THE AGREEMENT IS THE BEST THAT COULD HAVE BEEN ACHIEVED IN THE CIRCUMSTANCES. SINCE EARLY JULY, THE FOCUS OF PUBLIC ATTENTION HAS SHIFTED TO DOMESTIC ISSUES. AN OPINION POLL CONDUCTED IN MID- AUGUST INDICATED THAT THE THREE MAIN ISSUES OF PUBLIC CONCERN WERE LAW AND ORDER, PUBLIC SERVICES AND INFLATION.
RELATIONS WITH CHINA
2. THE AGREEMENT OVER THE NEW AIRPORT HAS BEEN WIDELY PERCEIVED AS MARKING A WATERSHED IN HONG KONG'S RELATIONS WITH THE PRC. THE MOU HAS BEEN GENERALLY WELCOMED AS AN ACCEPTABLE COMPROMISE WHICH HAS BEEN ACHIEVED IN DIFFICULT CIRCUMSTANCES. IT HAS REMOVED THE UNCERTAINTY WHICH HAD BEEN THE CAUSE OF A GREAT DEAL OF ANXIETY, PARTICULARLY AMONGST THE BUSINESS COMMUNITY. THE CONSENSUS IS THAT HONG KONG IS NOW FREE TO GET ON WITH THE VITAL AIRPORT PROJECT AND THAT THE PRICE FOR SECURING CHINA'S SUPPORT IS ACCEPTABLE. WE HAVE MADE THE POINT IN OUR PR THAT ALTHOUGH THERE HAVE BEEN CONCESSIONS TO CHINA, THESE HAVE BEEN CLEARLY DEFINED AND THEY LEAVE HONG KONG'S AUTONOMY LARGELY INTACT. THIS ASSESSMENT SEEMS TO HAVE BEEN ACCEPTED IN SO FAR AS IT RELATES TO THE REMAINING YEARS OF BRITISH SOVEREIGNTY.
3. CONFIDENCE IN THE FUTURE VARIES FROM TIME TO TIME HAVING REGARD TO DEVELOPMENTS IN CHINA AND PERCEIVED CHINESE INTERFERENCE IN THE ADMINISTRATION OF HONG KONG. IN AN OPINION POLL CONDUCTED IN JULY, 55 PER CENT OF RESPONDENTS SAID THAT THEY WERE NOT CONFIDENT THAT CHINA WOULD HONOUR ITS COMMITMENT TO
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