TNAG-1249-FCO40-1563-Press-reports-on-the-future-of-Hong-Kong-1983 — Page 186

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FM HONG KONG 19084OZ SEP 83

TO PRIORITY FCO

TELEGRAM NUMBER 1381 OF 19 SEPTEMBER

INFO PRIORITY PEKING, HONG KONG GOVERNMENT OFFICE LONDON

INFO ROUTINE HK GOVT REPS WASHINGTON, CG NEW YORK, UKMIS GENEVA,

BRUSSELS

FUTURE OF HONG KONG: PRESS COVERAGE.

1. OVER THE WEEKEND THE COMMUNIST PRESS INTENSIFIED THEIR

CRITICISM OF THE HONG KONG GOVERNMENT'S ECONOMIC POLICIES

AND IN PARTICULAR ITS FAILURE TO INTERVENE IN THE MONETARY

MARKETS TO STABILISE THE HONG KONG DOLLAR. AS THE LOCAL UNIT

BROKE THROUGH THE PSYCHOLOGICAL BARRIER OF 8 TO THE U.S. DOLLAR, TA KUNG PAO AND THE NEW EVENING POST ARGUED THAT THE HONG KONG

GOVERNMENT HAD CONNIVED AT 4TS WEAKNESS TO EXERT POLITICAL

PRESSURE.

2. WEN WER PO (COMMUNIST) SAND IT WAS CLEAR WHO WAS PUTTING

PRESSURE ON THE HONG KONG DOLLAR. BY WAY OF ILLUSTRATION, IT

NOTED THAT THE EXCHANGE RATE AGAINST THE U.S. UNIT STOOD AT 7.84 LAST FRIDAY WHILST AFTER THE FINANCIAL SECRETARY'S SPEECH

THAT EVENING IT DROPPED TO 8.04 THE FOLLOWING DAY. THE PAPER

TOOK EXCEPTION TO THE FINANCIAL SECRETARY'S OMISSION OF ANY

REFERENCE TO THE CHINESE GOVERNMENT'S EFFORTS TO SHORE UP

THE LOCAL UNIT BY SELLING U.S. AND BUYING HONG KONG DOLLARS

(MY TELNO 1371). THE PAPER WARNED THOSE WHO TRIED TO ACHIEVE

POLITICAL GOALS THROUGH MANIPULATING THE HONG KONG DOLLAR TO HAVE

NO ILLUSIONS. THE ADOPTION OF UNFRIENDLY ATTITUDES'' IN THE

TALKS ON HONG KONG'S FUTURE WOULD HAVE SERIOUS CONSEQUENCES.

IN DESCRIBING THE REASONS FOR THE LOCAL UNIT'S DECLINE AS PRIMARILY ECONOMIC (N.E. THE HONG KONG GOVERNMENT'S ECONOMIC MIS-MANAGEMENT OF ENFLATION) WEN WEH PO ARGUED THAT UNCERTAINTY OVER THE FUTURE

WAS PURELY SECONDARY.

3. THE INDEPENDENT PRESS HAVE ALSO TAKEN A SERIOUS VIEW OF THE

DOLLARS DECLINE WHICH THEY RECOGNISE AS AT LEAST PARTLY DUE TO A FALL IN CONFIDENCE. THE EXPRESS AND THE ORIENTAL DAILY HAVE ARGUED THAT IT IS THE MARKET AND NOT THE HONG KONG GOVERNMENT WHICH DETERMINES THE EXCHANGE RATE OF THE HONG KONG DOLLAR. THE TEO PAPERS HAVE ALSO CALLED ON THE CHINESE GOVERNMENT TO ELABORATE

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