IDENTIAL
HONG KONG CHINA QUESTIONS
16.
These are covered in the briefs for Peking. It will be necessary to decide aftir the Paking isit what can be BILATERAL ISSUES: DEFENSIVE POINTS
said in May Kay a
these
17.
STERLING (Brief no. 3)
The present extended guarantee agreement which
the Hong Kong Government have now accepted for their
own holdings of sterling protects their reserves at
about US 2.42. Given the current level of sterling and interest rates in London, this guarantee is
valuable to them, though the point cannot be made
much of, since it implies lack of confidence in
sterling's prospects over the next months.
18.
Possible Criticisms:
The UK have controlled Hong
Kong's reserves in the interests of sterling and an
ailing British economy. The Treasury's failure tọ
consult with Hong Kong about possible successor
arrangements well in advance of the expiry of the old
agreement in September was discourteous and damaging
to Hong Kong.
19. Line to Take: Hong Kong and the whole world have
benefitted from the stability secured by the sterling
agreements. The delay in reaching agreement on the
extension of the guarantee from September was because
Hong Kong itself needed to consider the application
of our unilateral offer to their special problems.
The agreement that ho.. now been reached is voluntary
#t of both adus.
and is airs;
taken no decli
the period n?
Possible arrangements
Car consulting Hong Kong
/other
CO PIDETIAL
"WALA) DAKS5178 400m 5/73 G.W.B.Ltd. Gp.863
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