FCO SUMMARY
Under the Sino-British Joint Declaration (JD) HK will be restored to China from 1 Jul 97. The British and PRC Governments hold regular Joint Liaison Group (JLG) meetings to consult on implementation of the JD. Basic Law for HK post 97 promulgated in Apr 90. JLG meetings briefly suspended after the events of June 89, and have made little progress since. Key areas of impasse are
funding of the new airport, defence lands, ASAS and localisation and adaptation of laws. British Nationality package has had a positive effect. Emigration has levelled off and applications for emigration are dropping. The economy grew by 5% in 92 and is forecast to grow by 5.5% this year. This is partly due to a surge in industrial output in Guangdong (S China) where HK has substantial commercial and industrial interests. Inflation remains high, and is likely to average 9% for 93, but has kept to a downward trend since Apr 91. HKG has embarked on a series of infrastructure projects, notably those associated with the new airport, to satisfy requirements into the next century. In October 92 the Governor announced proposals for key changes to the Legislative Council for the last elections in 1995 under British Administration. These met with great hostility from China. Since Apr 93, 13 rounds of negotiations on constitutional reform have been held, but little progress has been made. We still hope to reach agreement that this Council will be able to run its full term through 97 to
99.