CONFIDENTIAL
FM FCO
TO TELELETTER WASHINGTON
TELELETTER MFN8.3 HKB091/1
OF 091113Z MARCH 93
CONFIDENTIAL
a hucky one!
AND TO TELELETTER HONG KONG, UKREP JLG HONG KONG, PEKING
FROM J C MORRIS, HONG KONG
HKB 091/1
RECE
TO S Pattison, Washington
TO W Ehrman, PA, Hong Kong
TO A Paul, UKREP JLG Hong Kong TO N Cox, Peking
INDEX
DF
GISTRY
2. MAR 008
REGISTRY
PA
Action Taken
89
045063
MDTTAN 8120
613.
This Barnes Jomen Ms Samneen for Vigareten Aur Whitney
い
10/3
US/CHINA: MFN RENEWAL
1. Many thanks for the updates on policy on MFN under the new Administration, and for the Embassy's efforts at all levels to put across our case. On the Latter, a thought has occurred to us which may affect our tactics in lobbying our US contacts, and on which I should welcome your views.
2.
It is our impression that China's trade surplus with the US seems to be gaining prominence among the factors influencing MEN renewal. It seems that the record trade imbalance has raised hackles in the protectionist lobby and made it difficult for those in the Administration who want some pragmatic deal for China, (eg Yr Telno 371). We see a risk that US hostility to China's soaring trade surplus may yet be turned on Hong Kong. This could weaken our power to influence the US Administration on Hong Kong's behalf.
3
We note (from the US/China trade figures, 1987 to 1992) that while China's surplus with the US rose to record levels, Hong Kong's and Taiwan's surpluses correspondingly fell, mainly because Hong Kong and Taiwanese companies relocated production to China's coastal provinces. To put it another way, Hong Kong and Taiwan have been exporting their trade surpluses with the US, via outward-processing, to the Chinese. It could be that US wrath at a rising deficit with "Red" China would be soothed by the knowledge that net trade with "Greater" China is the same overall as five years ago, but I doubt it. I suspect that Americans
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CONFIDENTIAL