TNAG-1392-FCO40-1864-Future-of-Hong-Kong-briefing-for-meetings-and-visits-1985 — Page 80

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CONFIDENTIAL

HONG KONG: BRIEF FOR SIR Y K PAO'S CALL ON THE HOME

SECRETARY

Background notes

HONG KONG ECONOMY

1.

During 1984

strongly achieving

the Hong Kong economy performed

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

for the economy

setback and the long term outlook

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

markets show continued signs of improvement and,

although it has since fallen slightly, the Hang Seng

Index recently reached a four-year high having risen

nearly 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 than

the original takeover offer. This has been seen as

an expression of confidence in Hong Kong

Kong and its

future.

3.

Sir YK has a specific and hel fpul interest in UK/China trade. Following a meeting he had with the Prime Minister in November last year he wrote to her

about a Chinese proposal to build a steel mill at

Ningbo on the East Coast of China. A consortium of

CONFIDENTIAL

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