061034Z
LNMDAN 7001
SECRET
HMLNAN 8293
DD 061 KOZ FCOLN
FM H
TO FCOLN
060942Z JAN
GRS 582
SECRET
FM HONG KONG
TO DESKBY 06103OZ FCO
TELNO 21
OF 060942Z JANUARY 93
INFO IMMEDIATE PEKING, UKREP JLG HONG KONG, SUVA
PERSONAL FOR RICKETTS, HKD FROM GOVERNOR
PEKING: PERSONAL FOR COX
UKREP JLG HONG KONG: PERSONAL FOR GALSWORTHY SUVA: PERSONAL FOR PS/MR GOODLAD
YRTELNOS 4 AND 5: HONG KONG PAPER FOR OPD (K)
1. THANK YOU FOR YOUR DRAFT WHICH TAKES ACCOUNT ADMIRABLY OF MANY OF MY CONCERNS. YOU MIGHT CONSIDER ADDING SOMETHING ON THE INTERNAL DELIBERATION WHICH IS EVIDENTLY GOING ON IN CHINA. THE OPTIONS PAPER WHICH WE HAVE LEARNED OF THROUGH LORD STERLING INDICATES BOTH THAT THE VERY TOP LEADERSHIP ARE PLAYING A DIRECT ROLE IN POLICY ABOVE THE HONG KONG AND MACAU AFFAIRS OFFICE AND THAT THE PATH THE CHINESE WILL ADOPT IS NOT FINALLY DECIDED.
2. MY DETAILED COMMENTS ARE AS FOLLOWS:
PARAGRAPH 2, SECOND TIRET. YOU SHOULD TAKE ACCOUNT OF THE FACT THAT THE FALL IN THE INDEX IN MID-DECEMBER HAS BEEN AT LEAST PARTIALLY REVERSED. IT ROSE BY 110 POINTS ON 5 JANUARY ALONE, PARTLY AS A RESULT OF A LOOSELY-WRITTEN EVENING STANDARD ARTICLE SUGGESTING THAT I WAS WILLING TO COMPROMISE ON MY PROPOSALS AND PARTLY BY LI PENG'S VISIT TO SHENZHEN WHICH IS INTERPRETED AS HIS SUPPORT FOR THE SORT OF ECONOMIC REFORMS PROMOTED BY DENG XIAOPING. IT INDICATES THAT WHEN THE PRESSURE IS OFF THE MARKET WILL RISE, BUT FURTHER CHINESE HOSTILITY COULD OF COURSE PUSH IT DOWN AGAIN. YOU MAY WISH TO CHANGE THE TEXT BY DELETING THE BRACKETED PASSAGE IN THE FIRST SENTENCE OF THE SECOND TIRET AND REPLACING IT BY QUOTE ALTHOUGH IT HAS SINCE RALLIED, ENDING 25 PERCENT UP COMPARED WITH THE BEGINNING OF 1992 UNQUOTE. THIS IS MISLEADING IN THE CONTEXT OF THIS PARAGRAPH. I SUGGEST DELETING IT AND AMENDING THE SUBSEQUENT SENTENCE TO READ QUOTE THE UNCERTAINTIES MAY DISCOURAGE INVESTORS UNTIL THE PROSPECTS ARE CLEAR, AND THE PROPERTY MARKET MAY WEAKEN UNQUOTE.
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PARAGRAPH 2, THIRD TIRET. I AM NOT SURE THAT THIS GETS THE POSITION IN LEGCO QUITE RIGHT. I SUGGEST YOU MIGHT REPLACE IT WITH THE FOLLOWING QUOTE SO FAR IN LEGCO THERE HAS BEEN A COMFORTABLE MAJORITY IN SUPPORT OF MY PROPOSALS, WITH ROUGHLY 30 IN FAVOUR, 20 AGAINST AND 10 SITTING ON THE FENCE. BUT IT SEEMS THAT THE LATTER CATEGORY IS GROWING, WITH AN INCREASING NUMBER OF THE MIDDLE GROUND LOOKING FOR A COMPROMISE. ANY COMPROMISE HOWEVER, WOULD BE DENOUNCED BY THE UD (HK), WHO ARE ANXIOUSLY WATCHING FOR SIGNS OF BACKSLIDING BY ME OR HMG. SOME LEGCO MEMBERS
SEVERAL MONTHS UNQUOTE.
PARAGRAPH 9. CO-OPTING LOCAL WORTHIES AS NON-VOTING ADVISERS WOULD NOT BE PARTICULARLY POPULAR IN THE COMMUNITY BUT IT WOULD DEMONSTRATE THE GOVERNMENT'S READINESS TO RESPOND TO INTELLIGENT
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