TNAG-0946-FCO40-1165-Local-Intelligence-Committee-assessment-of-the-political-sit-1980 — Page 36

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Page No. 2 of 11 pages

Territorial Waters

4.

The Chinese authorities raised no objection to a yacht race from

Hong Kong following a course through what are claimed as Chinese territorial

waters. The turning point in the race was Pedro Blanco, an isolated rock 50

miles east of Hong Kong and 25 miles from the mainland. Nor was there

objection to the stationing of a Royal Navy patrol craft in the vicinity of

the rock to act as a guard ship for the race.

Banking and Finance

5.

The Bank of China in Hong Kong made a net profit of HK$18 m. in the

financial year just ended, an increase of HK$8 m. over 1978/79.

6.

Local communist controlled banks, in particular the Nan Yang

Commercial, Kin Cheng and Macau Nam Tung Banks, have been requested by the

Bank of China in Beijing to open US$ accounts with the Head Office in order

to speed up and safeguard transactions in US$ letters of credit. Communist

financial organisations in Hong Kong have been instructed to deal through third

party banks in any transactions involving South Korea, South Africa, Rhodesia

and Israel.

7.

The communist controlled Kiu Kwong Investment Corporation has obtained

a loan of HK$300 m. from the Bank of Communications for development projects

connected with the Mass Transit Railway. The projects are not specified but

are believed to be the construction of Tsuen Wan depot in which Kiu Kwong is

participating. The Corporation has obtained a further loan of HK$700 m. for an

unknown purpose from the Bank of America and the Hong Kong & Shanghai Bank.

8.

Local communist insurance companies have been authorised to direct

part of their assets into the local stock market. The Ming An Insurance Co.

has set up a subsidiary, the San Sai Kei Co. which has been granted a broker's

licence and is now trading on the Hong Kong Exchange. Ming An is also a

partner in a deal with Lombard Alliance to underwrite the construction of the

China Cement Co's new plant at Tap Shek Kok (para 3, October 1979 report).

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/ para 9.