CONFIDENTIAL
6.
We read with considerable interest in para 29 onwards of your full exposition of the monetary aspects of economic policies. The one element that causes us some concern here is the continuing appreciation of the Hong Kong with its concomitant effect on your export prices and volumes. We can foresee a possibility that local currency appreciation caused by external capital flows would act to the severe detriment of your manufacturing base. wonder if you have had any thoughts on this.
We
7. We envisage that our views on these technical aspects, which have been approved by the Secretary of State's Special Adviser and others within the Office here, will form part of the anticipated dialogue between ourselves, of which we have high expectations.
8.
I was very sorry to miss you during my recent visit to Hong Kong which, as you will appreciate, had to be aligned with other commitments.
boc:
Jame
fmcerely
Admon from i
Adrian Smith
Senior Economic Adviser
Mr J A B Stewart (HKGD)
Mr M Stewart (Special Adviser (Economic)
Mr H Maud (FRD)
CONFIDENTIAL
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