XN000022-1990-05-22 — Page 2

TUESDAY, MAY 22, 1990

1

WITHDRAWAL OF CHINA'S MFN STATUS WILL DAMAGE HK: GOVERNOR

THERE CAN BE NO DOUBT THAT WITHDRAWAL OF CHINA'S MOST FAVOURED NATION (MFN) STATUS WOULD SERIOUSLY DAMAGE HONG KONG, THE GOVERNOR, SIR DAVID WILSON, WARNED IN NEW YORK.

"IT WOULD DO THIS AT A TIME WHEN, WITH SEVEN YEARS TO GO BEFORE A CHANGE OF SOVEREIGNTY AND MANY DIFFICULT ISSUES TO TACKLE IF WE ARE TO BUILD HONG HỌNG SECURELY FOR THE FUTURE, WE CAN DO WITHOUT ADDITIONAL PROBLEMS, THE GOVERNOR SAID WHEN HE ADDRESSED THE ANNUAL DINNER OF THE ASIA SOCIETY ON MONDAY EVENING (NEW YORK TIME).

SIR DAVID SAID IT WAS NOT FOR HIM TO SAY WHAT UNITED STATES' POLICY TOWARDS CHINA SHOULD BE, BUT WHEN THAT POLICY COULD SERIOUSLY UNDERMINE THE ECONOMY OF HONG KONG, PERHAPS INADVERTENTLY, MUST WARN OF THE DANGERS.

THEN HE

THE GOVERNOR OUTLINED THE GROWING LINKS BETWEEN GUANGDONG HONG KONG, AND SAID THAT OVER TWO THIRDS OF CHINA'S EXPORTS TO UNITED STATES WERE RE-EXPORTED THROUGH HONG KONG.

1

AND

THE

"IF CHINA LOSES ITS MFN STATUS THAT WOULD KNOCK AN ESTIMATED US$10 BILLION OFF OUR TRADE FIGURES. THERE WOULD BE SEVERE JOB LOSSES FOR ALL THOSE ENGAGED IN THIS RE-EXPORT TRADE,

AS WELL AS THOSE MANUFACTURERS IN HONG KONG, A GOOD MANY OF THEM AMERICAN, ENGAGED IN MANUFACTURING ACROSS THE BORDER, HE SAID.

"I

SIR DAVID SAID ENDING MFN STATUS MIGHT BE DIRECTED AGAINST PEKING BUT IT WOULD BE A BODY BLOW TO HONG KONG JUST WHEN WE NEEDED TO KEEP UP ECONOMIC GROWTH TO GET US THROUGH A TIME OF CRUCIAL POLITICAL CHANGE.

"ENDING CHINA'S MFN STATUS WOULD ALSO PUT A SUDDEN BRAKE ON THE ECONOMIC PROGRESS OF THOSE SOUTHERN COASTAL PROVINCES WHICH HAVE BEEN AT THE FOREFRONT OF CHINA'S RECENT ECONOMIC LIBERALISM AND OPENNESS TO THE OUTSIDE WORLD. SIR DAVID SAID.

"THE PROCESS

OF BUILDING CLOSER LINKS BETWEEN CHINA AND THE REST OF THE WORLD IN WHICH HONG KONG HAS PLAYED A PIVOTAL ROLE WOULD INEVITABLY BE SET BACK, AND SET BACK BADLY.

- TTT

**

— —

"SO WE IN HONG KONG WATCH WITH GREAT ANXIETY HOW THE CHINA MFN STATUS QUESTION IS RESOLVED IN THE NEXT FEW DAYS OR WEEKS, SIR DAVID SAID.

"ONE OF THE REASONS WE IN HONG KONG HOPE FOR A STABLE EXTERNAL ECONOMIC ENVIRONMENT, AND NO SUDDEN MAN-MADE SHOCKS LIKE THE REMOVAL OF MFN STATUS FROM CHINA, IS THAT WE HAVE A GREAT DEAL TO DO TO BUILD SOLID FOUNDATIONS FOR THE NEW HONG KONG WHICH WILL BE BORN IN SEVEN YEARS TIME," HE ADDED.

/THE GOVERNOR