TNAG-1599-FCO40-2192-Hong-Kong-1987-Review-of-Representative-Government-1987 — Page 10

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A TAK 18/12

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Mr Gaul or.

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CONFIDENTIAL

DIED

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CABINET OFFICE

mr Hyam HKD

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fs/word Glenorther

70 Whitehall London SW1A 2AS Telephone 01- 270 0101

pawn.

Ref. A087/3571

Dear Patrick,

From: Mr F E R Butler cvor Gillmore

MURB 011/2.

RECEIVED IN REGISTRY

1 1 JAN 1988

DESK OFFICER

INDEX

PA

mr Mc Laren

14 December 1987

Lunch with the Hong Kong Association

effer, Hanod

157/12

I had lunch with the Hong Kong Association today. I was grateful to your office for briefing. You may like a note of the main points which were discussed:

1. The Association first raised Mr Martin Lee's visit. They thought it unfortunate that Mr Lee's visit had gone wrong and the majority opinion of those at the lunch. appeared to be in favour of direct elections in 1988. Their understanding was that Mr Lee had received indications from the PRC that this would not be inconsistent with the Basic Law, and even that the Basic Law would allow elections to continue after 1997. Some at the lunch implied that Mr Lee's refusal to meet Lord Glenarthur had simply been a means of applying pressure, since he had been told before he came to London that Lord Glenarthur would only receive members of LegCo. There was a general feeling that it was unfortunate that the White Paper was to appear before the Basic Law, but no disposition to suggest that this chronology could be changed. I made the point that no prior commitment had been made by the British Government to introduce direct elections in 1988 (this was acknowledged by those present); Mr Lee's disagreement was on procedure not substance; and there were strong views against direct elections in 1988 in Hong Kong as well as for them.

2.

There was some talk about the pegging of the Hong Kong dollar to the US dollar and the difficulties which this was beginning to cause with the United States because the fall of the US dollar was giving Hong Kong traders a substantial advantage in trading into the US. In other respects, those at the lunch favoured the continued pegging of the Hong Kong dollar and I was asked what defence I would make of it to the US Administration. I said that the way in which I would envisage defending the arrangement was that the interest of the United States in preserving financial stability in Hong Kong (to which the pegging of the dollar contributed) outweighed any trading advantage to Hong Kong, which was proportionately tiny in relation to the United States' total import bill.

Sir Patrick Wright KCMG

/3.

CONFIDENTIAL