THE FOREIGN AFFAIRS COMMITTEE
3
22 March 1989]
[Continued
and 25 below). The associated Exchange of Memoranda is discussed in greater detail in the section of this Memorandum on nationality (paragraphs 54-59 below).
VI. HONG KONG since tHE SIGNING OF THE JOINT Declaration: THE ECONOMY
15. As indicated earlier, while the question of Hong Kong's future remained unresolved, Hong Kong faced the prospect of a gradual erosion of confidence and a decline in its prosperity. By the early 1980s, and in particular in the initial phase of the negotiations in 1983, Hong Kong's economic prospects looked uncertain. Fears which surfaced during the negotiations added to the uncertainty, and exacerbated a situation characterised by a serious weakening in the international position of the Hong Kong dollar, volatility in the Hong Kong stock market, and a slump in property prices and investment. The nadir was reached in September 1983, when fears of an imminent breakdown in the negotiations led to a sharp fall in the value of the Hong Kong dollar.
16. Since the signing of the Joint Declaration, Hong Kong has again enjoyed rapid economic growth. In the past three years the average rate of growth has been over 10 per cent per annum. Growth of about 6 per cent is expected this year. The link between the Hong Kong dollar and the US dollar which was established in September 1983, has helped to provide a framework of stability and certainty which has benefited Hong Kong's external trade. The traditional entrepot trade with China and the rest of East Asia has revived in recent years and the container port is now the busiest in the world in terms of throughput. Investment in Hong Kong, particularly in plant and machinery, has grown substantially. The economic interrelationship between Hong Kong and China has developed at a rapid pace: Hong Kong is now China's foremost trading partner and there is extensive co-operation between Hong Kong firms and enterprises in China, particularly its southern provinces. Hong Kong is now the most important source of outside investment in China, accounting for some two-thirds of such investment. The property market is buoyant; there has been a rapid growth in hotel construction in response to growing tourist demand. A new Exhibition and Convention Centre, one of the most advanced in the world, has been recently completed and should enhance Hong Kong's role as a regional business centre. The Hong Kong Government are embarking on a large number of ambitious new infrastructure projects; and the construction of a third University has begun.
17. Today, Hong Kong is as dynamically successful as it has ever been; and its people are enjoying an unprecedented level of prosperity. Hong Kong has undoubtedly benefited from the generally favourable conditions of the world economy and from the open door policy of the Chinese Government. But by providing a clear and detailed blueprint for Hong Kong's future beyond 1997 and by creating the conditions in which economic realtions between Hong Kong and China have been able to develop rapidly, the Joint Declaration has also contributed to this success.
VII:
IMPLEMENTATION OF THE Joint DeclaraTION
18. Since the signature and ratification of the Joint Declaration, the British and Chinese Governments have been fully engaged in the work of implementing its provisions. The main forum for this work is the Sino-British Joint Liaison Group (JLG). The terms of reference for the JLG are prescribed in detail in Annex II to the Joint Declaration. Its functions are:
(a) to conduct consultations on the implementation of the Joint Declaration;
(b) to discuss matters relating to the smooth transfer of Government in 1997;
(c) to exchange information and conduct consultations on such subjects as may be agreed by the
two sides.
19. Annex II also lays down in broad terms the agenda for the JLG during the period between its establishment and 1 July 1997. Matters for consideration include action to be taken by the two Governments to enable the future Hong Kong Special Administrative Region to maintain its economic relations as a separate customs territory including its participation in the GATT, action to ensure the continued application of international rights and obligations affecting Hong Kong, procedures to be adopted for a smooth transition in 1997, and action to assist the Hong Kong SAR to maintain and develop economic and cultural relations with states, regions and relevant international organisations.
20. Annex II provides that each State shall designate a Senior Representative of ambassadorial rank and four other members of the Group. The British side's Senior Representative from the establishment of the Group following the ratification of the Joint Declaration in May 1985 until January 1987 was Dr (now Sir) David Wilson, then Assistant Under-Secretary of State (Asia) at the Foreign and Common- wealth Office and now Governor of Hong Kong. Since February 1987 the British Senior Representative has been Mr Robin McLaren, Sir David Wilson's successor as Assistant Under-Secretary of State (Asia). Other British members of the Group have included the Head of Hong Kong Department at the Foreign and Commonwealth Office, the Counsellor at the British Embassy in Peking, and two members drawn
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