CONFIDENTIAL
85
120015
MDHIAN 4718
HKD 026/3
CONFIDENTIAL
FM HONG KONG
TO IMMEDIATE FCO
TELNO 606
OF 27113OZ FEBRUARY 92
INFO IMMEDIATE TOKYO
TOKYO FOR PS/LORD CAITHNESS (VISITING)
LORD CAITHNESS'S VISIT TO HONG KONG:
GENERAL MOOD
1
¿TOP COPY Q DIST?
026/3
pa. Lord (; visit file
- 7 MARCH 1992:
y2012
SUMMARY
AFTER A REASONABLY GOOD YEAR IN 1991, THE ECONOMY SEEMS POISED FOR FURTHER EXPANSION IN 1992. INFLATION HOWEVER REMAINS A.
CONCERN. RELATIONS WITH CHINA ARE AT THEIR MOST STABLE SINCE 1989, WITH THE COMMUNITY ENCOURAGED, PERHAPS OVER-OPTIMISTICALLY BY A LESS CONFRONTATIONAL CPG STYLE AND THE CONTINUED ECONOMIC GROWTH OF SOUTHERN CHINA. THE NEW LEGCO IS BEGINNING TO OVERCOME
SOME OF ITS TEETHING PROBLEMS. THE DEBATE ON THE BUDGET CON 4 MARCH) WILL BE AN INTERESTING TEST OF ITS MATURITY. LAW AND ORDER REMAINS A MAJOR ANXIETY.
THE ECONOMY
2. AS ALWAYS IN HONG KONG, EXCEPTIONS ABOUT SHORT-TERM ECONOMIC GROWTH ARE A KEY INFLUENCE ON THE PUBLIC'S MOOD. THE ECONOMIC INDICATORS AT THE START OF 1992 ARE POSITIVE. LAST YEAR SAW GDP RISE BY AN ESTIMATED 4 PER CENT (COMPARED WITH 2.8 PER CENT IN
1990), DESPITE THE NORTH AMERICAN RECESSION. BUSINESSMEN ARE LOOKING TO IMPROVE ON 1991'S PERFORMANCE, THANKS MAINLY TO AN EXPECTED PICK-UP OF BUSINESS ACTIVITY IN THE US AND OTHER MAJOR TRADING PARTNERS. THE MARKET TALKS IS OF US FIRMS ORDERING NOW TO REPLENISH THEIR STOCKS IN ANTICIPATION OF GROWTH IN THE LATTER HALF OF 1992.
3.
AGREEMENT BETWEEN THE US AND THE PRC ON SPECIAL 301 TRADE ISSUES HAS BEEN ANOTHER CAUSE FOR OPTIMISM. PEKING'S WILLINGNESS TO MAKE CONCESSIONS HAS ENCOURAGED HOPES THAT THE PRC WILL BE
ABLE TO RESOLVE OTHER ARTICLE 301 DISPUTES AND TO RETAIN ITS MFN STATUS, THUS SAFEGUARDING HONG KONG'S ABILITY TO RELOCATE ITS MANUFACTURING CAPACITY IN SOUTHERN CHINA. THE MAJORITY IN THE US
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