TNAG-1267-FCO40-1616-Economic-situation-in-Hong-Kong-1983 — Page 396

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Mr Hoare

Mr McQuade

Mr Clift

CONFIDENTIAL

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Reference

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MKK09014

RECEIVED IN REGISTRY NO 51

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- 6 JUN 1983

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HONG KONG'S ECONOMIC SITUATION : THE HONG KONG DOLLAR

1.

I mentioned yesterday that I thought it was time we asked Hong Kong for an assessment of the current economic situation there and in particular for their views on the Hong Kong dollar which has been steadily falling for some time now. I do not think it will be long before Ministers and others start to show interest and concern, particularly as there has already been a good deal in the press including the Financial Times; one or

have also touched on the subject in

two

pessimistic vein.

2.

This feeling has been reinforced by a call this morning from the Assessments Staff (Mr Martin). He told me that at the JIC meeting earlier this week there was a considerable amount of interest expressed in the Assessments Staff doing a paper on the Hong Kong dollar, which would try to assess how far it would fall, what we know about the reasons for this fall and the implications thereof. I have told Mr Martin that when Mr Clift returns next Tuesday we shall discuss this with him. I have also warned him that the Governor is likely to be extremely wary of the Assessments Staff's suggestion of a JIC paper on the subject, particularly as the Assessments Staff would envisage bringing in financial experts from the Treasury and the Bank of England for a paper of this kind.

3.

We should clearly discuss this early next week. What I had in mind was to request the sort of telegram which I recall Hong Kong sent us in December 1982 before Lord Belstead's visit which set out on two sides the current financial and economic situation there, covering the dollar, the Hang Seng Index, property prices and the general state of the economy. Such a telegram would be useful here when we have to brief Ministers and the PUS (eg his forthcoming talks with the Australian PUS) on Hong Kong and current developments there.

26 May 1983

cola

W Morris

THIS IS A COPY

THE ORIGINAL HAS BEEN RETAINED

IN THE DEPARTMENT UNDER

SECTION 3 (4) OF THE PUBLIC RECORDS ACT 1958

CONFIDENTIAL