CONFIDENTIAL
135461
MDHOAN
338
economic scene.
That will be helpful for DTI. We propose suggesting that they draw on the following points to British business.
- The economic fundamentals in Hong Kong remain extremely good. There are excellent opportunities for business in both China and Hong Kong.
Suggestions in the pro-China press that British business may suffer contrast with statements made privately by Chinese leaders and officials. For example, Vice Premier Zhu Rongji during his recent visit to the UK stressed the opportunities available in China for British business.
The stock market has reacted to Chinese statements. However its fall should be seen against a rise of over 40 percent over the last year.
- The Legal position on contracts and franchises is that they will continue to be valid after 1997 unless they contravene the Basic Law. It is hard to imagine a situation where any contract or franchise would contravene the Basic Law. Before the Chinese seek to undermine any contract, they would have to consider carefully the implications for Hong Kong's economy, for any Chinese firms which may have a stake in the contract, and the likely public reaction in Hong Kong.
4. We would be grateful for your comments on this line and any other useful points that the DTI can make.
HURD
YYYY
ΜΑΙΝ
30
DISTRIBUTION
36
.HK AIRPORT POLITICAL
HKD
LEGAL ADVISERS//MISS BROOKS
PUSD//HD
ECONOMIC ADVISERS//HD
ERD//HD
RAD//MR WYE
PS
PS/MR GOODLAD
PS/PUS
SIR J COLES MR APPLEYARD
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CONFIDENTIAL