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Hong Kong even in the face of Chinese opposition. Officials look at things much more in the framework of what can be done to support Hong Kong without causing ripples in their relations with the PRC. The crunch would come, of course, if the PRC did something which had a direct negative impact on their existing investments in Hong Kong.
8.
In general the business community remains relatively confident for the time being. Imamura, Fuji Bank's Director for Asia, tells us that they believe "China will not introduce policies by design to the detriment of Hong Kong's future". Japanese firms will stay as long as they can and in private express some surprise at what they see as the flappability of Hong Kong business (we note from the Hong Kong press that the Hong Kong community for their part seem to regard the Japanese as rather over-optimistic). In any case key decisions on Japanese firms' positions post 1997 will be made primarily with a view to the length of their own particular profit cycle: 1992 for construction companies, 1994 or 1995 for manufacturers like Mita and Uniden. Since June some Japanese firms seem to have delayed crucial corporate decisions on new Hong Kong investment - Marubeni, the trading company, has postponed establishing a subsidiary there, and Japanese banks have reduced their involvement in the Hong Kong property and stock markets - and we are told that it will not be until September or October that boards will begin looking at postponed plans again. These decisions will be guided more than anything by the confidence of Hong Kong businessmen themselves.
9.
Politically, Japan will want to balance its economic interests in maintaining Hong Kong as a thriving financial and industrial centre with its more important general relationship with mainland China. Preservation of its economic links with Taiwan represents further complicating factor. Japan finds it difficult Lo parate the three elements. There is certainly much sympathy for Hong Kong and support for Hong Kong's continued autonomy (expressed most recently in the statement from the Arch Summit). We have made some headway here in getting the Japanese to focus on specific actions they could take to give some substance to this. Earlier this year Japan agreed to extend various forms of grant aid from the ODA budget to Hong Kong (despite its high per capita GNP) in furtherance of the importance of a stable and prosperous Hong Kong beyond 1997; and they have also made a contribution of $11m to the UNHCR appeal for Vietnamese Boat People in Hong Kong. We must continue to encourage other positive moves of this kind.
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