TNAG-1247-FCO40-1561-Press-reports-on-the-future-of-Hong-Kong-1983 — Page 28

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GR 500

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FM HONG KONG 083635Z JUN 83

TO ROUTINE FCO

TELEGRAM NUMBER 775 OF 8 JUNE

AND TO ROUTINE PEKING

(79)

MKK040/2

RECEIVED IN KLOSTKY NO. 51

13 JUN 1983

DESK 0544.

INFO ROUTINE HONG KONG GOVERNMENT OFFICE LONDON

INDEX

PA

DISTRY ton Tøken

FUTURE OF HONG KONG: PRESS COVERAGE.

THE CONTINUED DECLINE OF THE HONG KONG DOLLAR TODAY ATTRACTED PROMINENT COVERAGE IN MOST PAPERS.

2. A CONTRIBUTOR TO THE COMMUNIST WEN WEI PO WARNED THE HONG

KONG AND BRITISH GOVERNMENTS AGAINST SPREADING RUMOURS OF A

**CRISIS OF CONFIDENCE' TO EXPLAIN THE SLIDE OF THE HONG KONG

DOLLAR. SUCH RUMOURS WOULD ONLY UNDERMINE HONG KONG'S PROSPERITY

AND STABILITY. THE CONTRIBUTOR ARGUED THAT THE CHINESE GOVERNMENT

HAD ALREADY ALLAYED LOCAL RESIDENTS' WORRIES ABOUT THE FUTURE

BY REPEATING ASSURANCES ON THE TERRITORY'S PROSPERITY AND

STABILITY AND BY ANNOUNCING SPECIFIC MEASURES. FOR EXAMPLE, PEKING

HAD ANNOUNCED ITS PLANS TO INVEST IN LOCAL INDUSTRY. BY CONTRAST,

THE BRITISH AND HONG KONG GOVERNMENTS HAD FAILED TO DO ANYTHING. THE GOVERNMENT HAD REFUSED TO WAIVE THE WITHHOLDING TAX ON HONG

KONG DOLLAR DEPOSITS AND THERE HAD BEEN MASSIVE SALES OF THE LOCAL

CURRENCY FOR STERLING ON THE LONDON MARKET. THE LEFT-INCLINED

TIN TIN DAILY NEWS SIMILARLY HELD THAT THE FALL IN THE HONG KONG

DOLLAR HAD NOTHING TO DO WITH A CRISIS OF CONFIDENCE. THE HONG

KONG GOVERNMENT WOULD BE ABLE TO TURN THE TIDE PROVIDED IT MADE

EFFORTS TO CURB GALLOPING INFLATION.

3. TWO INDEPENDENT NEWSPAPERS, THE FINANCIAL DAILY AND THE EXPRESS ARGUED THAT THE CHINESE, BRITISH AND HONG KONG GOVERNMENTS

ALL HAD A RESPONSIBILITY TO TAKE DETERMINED AND SINCERE ACTION

TO HALT THE DOLLAR'S DECLINE. THE EXPRESS TOOK THE CHINESE

GOVERNMENT TO TASK FOR PURCHASING LARGE QUANTITIES OF US CURRENCY, THEREBY INCREASING THE PRESSURE ON THE LOCAL UNIT.

4. THE HONG KONG DAILY NEWS (INDEPENDENT RIGHT WING) CARRIED AN EDITORIAL WHICH ARGUED THAT THE LOCAL CURRENCY HIT RECORD LOWS EVERY TIME PEKING SPOKE OF RECOVERING SOVEREIGNTY OVER HONG

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