RESTRICTED
HKB
102/1
Dr Bristow Smith FED RECERVED IN SEGISTRY
03 M^ 1993
Reference
21/7
3দ
Mr Why?
15
Billets on
Fi.
Homen's seen the ref. document. But the story is elorrinely clear.
I agree with for Wye.
HONGKONG AND SHANGHAI BANK: POSSIBLE RESUMPTION OF FORMER PREMISES
IN SHANGHAI.
PA
Action: Tako
Jeill
1. Thankyou for copying me Mr Davies' letter of 7 July to Mr Ricketts on this subject. This is a fascinating story. I suspect that the Shanghai authorities may be taking advantage of the "UK/China dispute" as an excuse to make life more difficult for the HKSB in their negotiations with the Bank. It seems to me that the Municipal government's primary interest here must be to extract as much money as they can from the HKSB. I cannot see them being satisfied with the Bank's willingness to put the building back into a habitable state. They would want considerably more than that. As far as the Shanghai government is concerned the Bank will have to come up with a better offer.
2. It is also a matter of symbolic importance. The building on the Bund is one of the most imposing there and is, in its way, the symbol of the bad old days of imperialism. That is presumably at least one of the reasons why the Municipal government decided to set itself up in that building. It was a clear sign that Shanghai was under new management. The authorities will therefore probably feel that they have to take national (ie Peking's) feelings into account as well as their own material interest. The Shanghai authorities would not wish to go ahead with a deal with the HKSB without authorisation from Peking. There is thus something in the arguments being put to the HKSB that the political difficulties in the China/UK relationship are likely to have a effect on the deal.
3. The Chinese feel that one the best ways to influence the British is through their pockets. The HKSB's idea to move back into its old premises in Shanghai provides an irresistable opportunity to them to put pressure on one of the major British commercial/business entities in the region and through them on the British government. This is only to be expected. We should not expect however that as soon as the UK/China political difficulties are solved, it will all be plain sailing for the HKSB. They will still have to deal with the Shanghai authorities desire to extract as much money as possible out of the deal. It may suit the Chinese to imply that the solution to HKSB's problem lies in the hands of HMG. Essentially however it does not. It is a commercial matter for the Shanghai authorities, though there are naturally political overtones. We should try to ensure that the HKSB realises this.
CODE RAD
RF Wye
Far Eastern Section
Research & Analysis Dept OAB 2/125 210 6219/6216 20 July 1993
cc Mr Ricketts HKD
RESTRICTED