TNAG-1872-FCO40-2660-Relations-between-Hong-Kong-and-China-1989 — Page 132

HKB 020/6RESTRICTED

RESTRICTED

FM HONG KONG

TO TELELETTER PEKING

TELELETTER PA CR 1/2/4841/66

OF 13084OZ APRIL 89

AND TO TELELETTER FCO

FROM

Ka Mr Seaton, FED

49

146757

MDTTAN 6867

Mor Wright, Econ. Advisers

2. Mr Jannar 1+/4

!

४

3. Enter

Enter + pa.

epresiv

: RD CLIFT, POLITICAL ADVISER, HONG KONG

FOLLOWING FOR COPIED TO

:

DR J HOARE, BE PEKING

C WOOD ESQ, HKD, F CO

1

WHEN XU JIATUN OF NCNA HAD TEA WITH THE GOVERNOR ON 7 APRIL, THE GOVERNOR ASKED HIM ABOUT THE EXTENT TO WHICH THE SLOWING DOWN OF REFORM WOULD AFFECT GUANGDONG PROVINCE. XU SAID THAT THERE WOULD BE SOME EFFECT AND SPECIFICALLY MENTIONED THE QUESTION OF THE RIGHT TO RETAIN FOREIGN EXCHANGE EARNINGS. HE MAINTAINED THAT UP TO NOW GUANGDONG HAD HAD AUTHORITY TO RETAIN 100 PERCENT (ONE HUNDRED PER CENT) OF FOREIGN EXCHANGE EARNINGS, WHEREAS OTHER PROVINCES WERE RESTRICTED TO ONLY 20 PERCENT. HE SAID THAT FROM NOW ON THERE WOULD BE AN ACROSS THE BOARD LIMIT ON RETENTION OF 15 PERCENT (FIFTEEN PER CENT) FOR ALL PROVINCES AND AREAS WITH NO (NO) EXCEPTIONS.

2. XU WAS EMPHATIC THAT THIS WAS THE CASE. IT SURPRISES US, IN THE FIRST PLACE BECAUSE WE HAD NOT THOUGHT THAT GUANGDONG HAD THE POWER TO RETAIN 100 PER CENT OF FOREIGN EXCHANGE EARNINGS AT PRESENT: AND SECONDLY BECAUSE THE ACROSS THE BOARD NEW LIMIT DESCRIBED BY XU LOOKS PRETTY DRACONIAN. INDEED IF IT IS APPLIED TO GUANGDONG IT IS BOUND TO HAVE A SERIOUS DAMPENING EFFECT THERE, A MATTER OF OBVIOUS INTEREST TO HONG KONG.

I SHOULD BE GRATEFUL FOR ANY COMMENT ON THIS QUESTION WHICH YOU CAN LET US HAVE.

3

SIGNED R D CLIFT

YYYY

NNNN

DISTRIBUTION