TNAG-0322-FCO40-358-Construction-of-underground-railway-system-in-Hong-Kong-1971 — Page 149

CONFIDENTI AL

NOTE OF A MEETING WITH SIR FREDERICK BENNETT, MP TUESDAY, 17TH NOVEMBER 1970

This meeting was held in the House of Commons office at the request of Sir Froderick Bennett, who did not disclose at the time of making the arrangement that he had already requested an appointment with a DTI Mini stor. He explained that he had be n given by name by the Senior Trade Commisrioner as looking after the Hong Kong desk in the DoTI.

2.

Sir Frederick stated that he had no personal interest to declare in the matters concerning Hong Kong which he wished to discuss.

He was, however, a member of an Ad Hoc Committee formed by Mr Anthony Royle on UK-Hong Kong relations. As a result of a recent visit to the Colony, he was disturbed by fears expressed to him by leading members of the business community, particularly by Chinese, concerning the impact on Hong Kong's position vis-a-vis China of the increasing Japanese inroads into the Hong Kong market. On the other hand, ho detected an indifference in Hong Kong Government circles at the winning by Japan of major contracts in the public sector. He detected no disposition whatsoever in those circles to assist British commercial interests. Indeed, he considered that the official Hong Kong Government attitude might be interpreted as vorging on hostility to those interests.

3.

Against this background he was particularly anxious about the award of contracts for the Hong Kong Underground scheme. This concern was shared by prominent local Chinese businessmen. Apart from the purely commercial prizos at stake, the failure of the UK to win this contract in the face of Japanese competition would have serious repercussions on British prestigo throughout Asia. Indeed, he had heard this view expressed as far afield as Kuala Lumpur. There was a danger, in his view, that China, who was opposed to any increase in Japanese influence in Hong Kon;, might interpret a British failure to win the Underground contract as evidence of a diminishing British commitment to Hong Kong with the consequent risk that China wight radically change her current posture towards Hong Kong.

4. Sir Frederick stated that he intended to discuss the political aspects of this issue with Mr Anthony Royle. However, he also wished to convey his views to a DTI Minister. He asked for comment on his general thesis and posed the following questions:-

5.

a.

b.

Was DII aware of the importance of the Underground project?

Could HG intervene to prevent Hong Kong going out to international tender?

Could UK aid funds be used to support any UK bid?

I replied that I was unable to comment on the political issues which he had raised. However, there was no evidence to support the view that there was any hostility in Hong Kong Government circles towards UK commercial interents. Hong Kong was a free port and an open market. UK firms had to sell their goods on their commercial morits. With regard to public sector contrects, the Hong Kong Government operated an open tender system on strict

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COFIDENTI AL