removal of a major uncertainty for the territory's future
and stressing the important of making a success of the 1991
elections. We hope that once the Chinese have seen the 1991
legislature working in practice, they will in time come to accept our view that a higher proportion of directly elected
seats should be introduced in 1995 (when the last elections
under British Administration are due to take place) and maintained, with their agreement, after 1997. We consider that it would have been foolish and irresponsible to have devised a system which would have resulted in a dead end in
1997.
Mood in Hong Kong
13.
Confidence has recovered from
the trauma of events in
China in June 1989 but there is still nervousness not far
below the surface. Increasing emigration from the territory is one consequence. 42,000 people left Hong Kong in 1989,
many of them key professionals, and a further 62,000 left in
1990. The level of emigration is not expected to decline in
the immediate future.
14. Reaction to the events of June 1989 combined with
austerity measures in China contributed to a significant slow-down in economic growth. The stock and property markets have largely recovered and other economic indicators
have gradually followed suit. However, the rate of economic growth remained modest in 1990, although there was some improvement in the latter part of the year. The crisis in the Gulf caused some uncertainty in the short term.
Nationality
15. The exodus of talented people from Hong Kong is a problem which Britain takes very seriously. For this reason it was felt that special measures had to be devised to give
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