TNAG-1392-FCO40-1864-Future-of-Hong-Kong-briefing-for-meetings-and-visits-1985 — Page 105

BACKGROUND

ECONOMY

CONFIDENTIAL

1.

During 1984

the Hong Kong economy performed

strongly achieving a remarkable growth rate of 9%. Although growth has not been sustained at this level

during the first half of 1985, this appears to be only a temporary setback and the long term outlook

for the economy remains good. Domestic exports

during the first six months of 1985 have been lower

than forecast, but total exports have risen

reflecting the rapid expansion in re-export trade,

particularly with China. The property and land and,

markets show continued signs of improvement

although it has since fallen slightly, the Hang Seng Index recently reached a four-year high having risen

nearly 1000 points

1000 points in the past year. Un employment

and inflation figures remain low.

2.

four

After an intense battle lasting over

weeks, Sir Y K Pao gained control of the Wheelock

Marden Group in March this year.

He defeated

Singapore based financier Mr Kheo Teck Puat. Sir Y

K Pao's final ofer values the Wheelock Marden group

at about Hong Kong $2.5 billion - 23% higher

higher than

the original takeover offer. This has been seen as

an expression of

its confidence in Hong Kong and

future.

3.

a

a

Sir Y K has a specific and helfpul interest in UK/China trade. Following a meeting he had with the

Prime Minister in November last year he wrote to her

about Chinese proposal to build steel mill a t Ningbo on the East Coast of China. A consortium of UK companies led by Davy McKee and supported by Sir Y K Pao has since been established to pursue the

project.

Since the project was first proposed,

authorities have expressed the hope

the Chinese

CONFIDENTIAL

Page 105Page 106