TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 106

in the discussions on the different subjects, will

themselves be different. Discussions on the Sterling

the

Agreements with Hong Kong must be linked to the time-

table for discussions with other signatories;

timing and urgency of any discussion on exchange rate

policy will be influenced by world monetary developments

But there is no timetable for discussion on the more

fundamental questions of financial structures; nor

indeed does there seem to be much awareness that these

are questions on which we might be able to be helpful.

The draft telegram to the Governor attached therefore

has as its objective the preparing of the ground for

a systematic dialogue on possible reforms of financial

structure and management.

6.

We agreed that Hong Kong is very short of people

both to plan and to carry out such reforms. They are

also suspicious of any suggested changes which have

not been a part of Hong Kong's success story in the

past, and, especially, when they are pressed on the

Hong Kong Government by HMG, who se financial performance

the Hong Kong Establishment affect to despise.

7.

We agreed that Hong Kong might need help from us

this autumn but that the offer would have to be made

with care. The Governor is coming on leave on 4

August. We should therefore take the chance to concert

take 26

and agree our offer with him in the course of discussie

which we would visualise as ranging widely over the

whole range of problk

with

The right moment for such

discussions would be when we are clearer on how the

Sterling Agreement question is to be handled in

relation to Hong Kong. It is possible that the

/discussion