TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 211

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20.

In view of the special relationship between Hong Kong and China, any significant change in China's economic policy is likely to be detrimental to business confidence in Hong Kong. It would be in Hong Kong's interests for China to move decisively but steadily to tackle its inflation problem. Any attempts at control that are seen as more than a temporary repudiation of the reform programme could have serious implications for confidence. The need for China to establish a convincing track record in terms of economic policy

remains (paragraph 49).

Economic Analysis Division Economic Services Branch Government Secretariat 10 October 1988

CONFIDENTIAL # 3