TNAG-1890-FCO40-2683-Visits-by-Sir-Geoffrey-Howe-and-by-Douglas-Hurd--Secretaries-1989 — Page 13

CONFIDENTIAL

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MDHIAN 1287

BOTH IN HONG KONG AND IN THE HINTERLAND OF GUANGDONG IS PROCEEDING AS NORMAL, BUT THERE ARE REPORTS OF SECOND THOUGHTS ON INVESTMENT AND NEW PROJECTS.

CIVIL SERVICE

5. THE CIVIL SERVICE HAS CONTINUED WORKING NORMALLY BUT MORALE AND

CONFIDENCE HAVE BEEN SERIOUSLY AFFECTED. THE QUESTION OF RIGHT OF ABODE HAS ASSUMED OVERWHELMING IMPORTANCE. MOST ARE PREPARED FOR A SHORT PERIOD TO WAIT AND SEE WHAT HMG WILL BE PREPARED TO DO. ANY UNDUE DELAY, OR A NEGATIVE RESPONSE, CAN BE EXPECTED TO CREATE A SEVERELY NEGATIVE IMPACT ON BOTH RETENTION AND PERFORMANCE. AT THE SAME TIME THERE IS CONCERN OVER THE DIVISIVE EFFECTS OF CATEGOR- ISATION AS BETWEEN GRADES OF CIVIL SERVANTS AND BETWEEN CIVIL SERVANTS AND THE PUBLIC.

THERE IS CONSIDERABLE PRESSURE FOR IMPROVED PAY AND CONDITIONS OF SERVICE.

6.

EXCO/LEGCO

7.

THERE HAS BEEN AN INCREASING TENDENCY FOR OMELCO TO WISH TO BE SEEN TAKING ACTION INDEPENDENTLY OF THE ADMINISTRATION AS THOUGH, THROUGH FRUSTRATION AT THE INIVITABILITY OF FUTURE ARRANGEMENTS AND THE WEAK POSITION OF HONG KONG, THEY FEEL THE NEED TO SHAKE OFF CONSTITUTIONAL CONSTRAINTS AND TAKE ON THE BRITISH, HONG KONG AND CHINESE GOVERNMENTS. THE PROPOSED ESTABLISHMENT OF AN OMELCO OFFICE IN LONDON AND THE INVOLVEMENT OF MEMBERS IN THE 'HONG KONG PEOPLE SAVING HONG KONG'' MOVEMENT ARE CASES IN POINT. IT REMAINS TO BE

SEEN WHETHER THE CONSENSUS REACHED ON POLITICAL DEVELOPMENT WILL SURVIVE THE STRAINS BETWEEN A LIBERAL LOBBY BECOMING MORE RADICAL

AND THE CONSERVATIVES.

MAINLAND ORGANISATIONS IN HONG KONG

8.

ALTHOUGH OUTWARDLY BUSINESS PROCEEDS AS NORMAL CHINESE ORGANISATIONS HERE HAVE SUFFERED A MAJOR BLOW TO THEIR POLITICAL EFFECTIVENESS. STAFF FROM BOTH COMMERCIAL AND QUOTE POLITICAL

UNQUOTE ORGANISATIONS SUCH AS THE NEW CHINA NEWS AGENCY AND THE COMMUNIST PRESS MADE VERY PLAIN WHERE THEIR SYMPATHIES LAY. THE EFFECT HAS BEEN THAT THE MAINLAND'S PROPAGANDA ORGANS HAVE BEEN

EFFECTIVELY SILENCED AND UNITED FRONT WORK BY THE NCNA AND

COMMERCIAL ORGANISATIONS APPEARS TEMPORARILY TO HAVE CEASED.

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