CONFIDENTIAL

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hit the UK with a vengeance.

Hardly a week goes past without

a new China fund being launched in the UK. Investment in

China has become a retail occupation in the UK as it has been for some time in Hong Kong.

The Prime Minister's speech also recognised that with Asia's

growing economic success comes more open and democratic

societies and also a growth of Asia's political influence in

the world.

speak.note.PET.JRB

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That is something we think is long overdue. Some aspects

regional security, UN peacekeeping etc are not of concern

to Hong Kong. Others are. Although Britain is not directly involved in APEC, we are glad to see that this is developing strongly, and that the Financial Secretary will be

representing Hong Kong at the APEC Leaders Meeting in

Seattle next month.

In short, the Prime Minister's speech showed that we have

spotted the trend and that we intend to be active in working

with Asian countries across the full range of issues.

Hong Kong has always had a special priority for HMG, and that will continue. Our responsibility to see full implementation of the Joint Declaration, to provide services

for British passport holders in Hong Kong, and our deeply

rooted commercial relationship ensures that.

But the new priority for Asia within Britain's foreign

policy is helpful in the Hong Kong context too. Even though

the FCO's resources are stretched very tight, we are ploughing over £25 million into a new Consulate-General building. Ground-break is taking place during this visit.

It will become one of our largest diplomatic posts anywhere.

This is as clear a signal as possible that Britain intends

to stay engaged for the long-term in Hong Kong as part of a higher profile in Asia.

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