SECRET
FM HONG KONG
TO DESKBY 07090OZ FCO
TELNO 2839
OF 070149Z DECEMBER 92
SECRET
EGREES azk
INFO IMMEDIATE PEKING, UKREP JLG HONG KONG
200
р.а.
Constit Dept
136614
MDHIAN 1012
TOP COPY Q DIST?
MY TELNO 2817: CONSTITUTIONAL DEVELOPMENT: ASSESSMENT OF PRESENT POSITION
SUMMARY
1. AN EVENTFUL WEEK.
THE CHINESE HAVE FINALLY SUCCEEDED IN BRINGING ABOUT A SIGNIFICANT FALL IN THE STOCK MARKET, CAUSING CONSIDERABLE CONCERN AMONG ORDINARY PEOPLE IN HONG KONG. WE MUST KEEP OUR HEADS DOWN AND RIDE OUT THE STORM. SUPPORT IN LEGCO STILL HOLDING UP.
DETAIL
2. A SERIES OF BELLICOSE CHINESE STATEMENTS CAUSED THE HANG SEND INDEX TO FALL BY ABOUT 1000 POINTS IN THE FOUR TRADING DAYS 30 NOVEMBER TO 3 DECEMBER. WE BELIEVE THAT THIS WAS DUE LARGELY TO LOCAL SELLING, INCLUDING BY MAINLAND CHINESE INTERESTS. OVERSEAS INVESTORS GENERALLY WATCHED FROM THE SIDELINES. THE MARKET BOUNCED BACK ON 4 DECEMBER, RISING BY ALMOST 300 POINTS. OTHER CIRCUMSTANCES, THIS WOULD HAVE BEEN A VERY REMARKABLE RISE.
3.
IN
THE CONTINUING CHINESE INTRANSIGENCE IS CAUSING UNDERSTANDABLE CONCERN AMONG THE COMMUNITY AS A WHOLE. THE LATEST POLLS SUGGEST THAT SUPPORT FOR MY PROPOSALS AS SUCH REMAINS REMARKABLY SOLID, BUT THAT MOST PEOPLE WANT THE PRESENT ROW WITH THE CHINESE TO BE RESOLVED. THE WISH TO HAVE THE BEST OF BOTH WORLDS IS BY NO MEANS UNCOMMON IN HONG KONG. WHAT IS PERHAPS MOST ALARMING IS THAT THE RECENT CHINESE BEHAVIOUR IS CAUSING MANY PEOPLE TO WONDER ONCE AGAIN, WHEN THE MEMORIES OF 1989 HAD JUST BEGUN TO FADE, WHAT LIFE WILL BE LIKE AFTER 1997 AND WHETHER THE CHINESE PROMISES SET OUT IN SUCH DETAIL IN THE JOINT DECLARATION AND THE BASIC LAW CAN BE TRUSTED. I WOULD EXPECT TO SEE AN INCREASED INTEREST IN EMIGRATION, AT LEAST IN THE SHORT-TERM.
4. THE PROSPECTS ARE, HOWEVER, BY NO MEANS TOTALLY NEGATIVE. OUR ASSESSMENT IS THAT WE HAVE AT PRESENT AT LEAST 32 SOLID VOTES IN THE LEGISLATIVE COUNCIL FOR MY PROPOSALS ON CONSTITUTIONAL
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