TNAG-1169-FCO40-1449-Future-of-Hong-Kong-1982 — Page 85

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5. An alternative suggestion of Sir Y K's is that money for

a soft loan might be found in Hong Kong if the Hong Kong Government

would act as guarantor.

6. But as Lord Carrington has explained there are great

difficulties and the Hong Kong idea is unprecedented. This is

not something to be rushed. Nonetheless we are consulting all

concerned in Whitehall and Hong Kong. ECGD have said that it is

impossible for them to soften Consensus terms for China (recently

risen from 7.75% to 10%). Treasury have confirmed this, pointing

out that as well as breaching the Consensus to do so would have

the wider effect of making it impossible to draw a dividing line

between export credit and aid. And, there seems no current

prospect of substantial funds being found from the aid programme

to support projects in China. (The Japanese 3% loans count as aid).

But there are some avenues still to explore (notably ATP).

Hong Kong and General Department

31 March 1982

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