ENT HOUSE HONG KONG.

TUE 01 DEC 92 11:12

PG.09

CONFIDENTIAL

-3-

the selection of representatives of functional constituencies.

I

There was a lot in this vein but I suspect at the back of his mind was satisfaction that he had had his money on mainland China rather than Hong Kong. It is evident among many chinese businessmen, both that they are playing politicians and that they have nothing to lose by taking a pro-china stance in public. find a number of the more thoughtful and reflective are willing in private conversations to go a long way in support of the Governor and understand the need both to test china's commitment to the implementation of measures enshrined in the Joint Declaration and to entrench those principles (especially the rule of law) on which Hong Kong's prosperity has been built.

9.

The critical period is expected to come when proposals are

The site preparation discussed for the Airport Franchises. contact is not in itself seen as a major test by which the future can be judged, though signature on 30 November will be helpful in the short term.

10.

Sir John Hoskyns is reported in the SCMP of 26 November (page 3 of the Business section) as suggesting that the democracy row is hurting UK firms. I am surprised at the attention given to his remarks. Sir John and his party came to drinks the previous evening and none expressed particular concern or indeed interest. One of his members is planning to set up a plant in

Sir John is Shenzhen: he sought my advice and was reassured.

inexperienced on this issue: he struck me as one of those visitors who talks rather than listens.

He saw no

11. On 27 November, Professor Kao (Vice-Chairman of the Chinese University) and one of the most impressive men I have met in Hong Kong) spoke briefly at the end of a long discussion. chance of Chinese backing off. Initially, he said, in the aftermath of the Governor's speech to Legco the chinese reaction

But he had been surprised had been tough but not exceptional.

how much harder it had become. He saw popular support for the proposed measures evaporating.

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