TNAG-0932-FCO40-1151-Relations-between-Hong-Kong-and-China-1980 — Page 45

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CONFIDENTIAL

The meeting briefly considered whether a Ministerial commercial visit should

now go ahead but concluded that it would be inappropriate. It was now up to the individual companies assisted by the new PEP Division to make the running. However the meeting did agree that Ministers visiting Peking might stop off in Guangdong. It also approved Mr Benjamin's invitation to the Governor of the Province as an indication both of our interest in further cooperation and as a means of demonstrating that the Chinese should talk directly to us and not via intermediaries such as Mr Potter.

UN AID TO CHINA

40 Mr Benjamin noted that the UN were in the process of establishing a fairly substantial presence in Peking and were considering assisting some 40 to 50 projects via the UNDP. A few were developmental but most were commercial and it was important for the UK to keep an eye on this development and ensure that British companies submitted tenders for appropriate contracts.

CHINA HONG KONG COMMERCIAL RELATIONS

41 Mr Dick and Mr Priston introduced the latter's paper on this subject which had been circulated some days before the meeting. They noted that in general the Chinese preferred to deal bilateraly but at the same time there was a great deal of knowledge about the market in Hong Kong and there were occasions when it was to companies' advantage to deal via the colony. The paper had set out to examine whether the balance of UK effort was correct and whether more use could be made of Hong Kong. It had concluded that while there were advantages to trading via Hong Kong there were no further specific initiatives that IMG should undertake to capitalise on them further.

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Hong Kong and General Department had suggested a number of amendments which would be incorporated in the revised paper. In discussion the meeting agreed with Mr March's conclusion in his telex on this matter that MG should avoid arousing false expectations among Bitish companies about the opportunities in Southern China by giving the impression that this is the major reason for paying more attention to Hong Kong. Hong Kong was a very important market on its own account and as such warranted considerable effort from British firms. Mr Clift noted however that companies could be encouraged to approach both markets at once by using Hong Kong as an entree into Southern China while at the same time making efforts in the local market.

43 Mr Allen noted that so far the meeting had been discussing ways of making use of Hong Kong that were applicable to all countries but he felt that the meeting should consider whether it was possible to make the UK's nominal ownership of the colony work specifically in its favour. He doubted whether it was. Mr Priston agreed. Although the colony was very valuable to the Chinese strong ann methods of pressuring them to buy more from us ie by a'reverse Gibraltar" would be unlikely to succeed and might well harm our interests more than hers. Mr Clift agreed. Any such action would hurt Hong Kong and by implication the UK more in the long run than it wouldhurt China. Mr Dick said that the paper would be re-written and circulated.

HMG's ORGANISATIONAL APPROACH TO CHINA AND HONG KONG

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Mr Dick invited comments on the suggestion from Sir Michael Palliser and others that the Working Group should henceforth become a China/Hong Kong working group.

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