TNAG-2036-FCO40-2900-Visits-from-countries-other-than-the-UK-to-Hong-Kong-1990 — Page 15

..

TJS/sh

PRIVY COUNCIL OFFICE

203

RESIDENT

ALYTENSE

OF THE

Mr Burns

COUNCIL

Mr Davies, FED)

ils Paul, HK)

We ought wi due corn

woofer come

асалик

comment (taking accorime of those of the

nv Dame', FED

WHITEHALL. LONDON SWIA 2AT

&

Gor", to whom the letter & enclover and be faxed)

Mr Smilks Aseris stiker we

Sv G Howe's Евер Ака

Lave

KA

ps

PS/Lord Cardina 26 September 1990

none Laven

nv Pomers

Head HKD

from lauventally flawal.

suggestion is broadly speaking what we &

bean dong.

it

112.

The main poul

He is able to play in

даваніну precisely be cause

прет

Schmi

Dear Steile galvaning Be

Sheiletante, is it a

"Enecess funt capitalish economy.

-HKB 026/7

RECEIVED

RS-7 NOV 1990

DESK OFFICER

INDEX

PA

During the Lord President's visit to Australia, he had occasion to look through the report to Prime Minister Hawke and Senator Evans prepared by Ross Garnaut (now Chairman of the R & I Bank in Perth, formerly, of course, Australia's Ambassador in Peking), about the implications for Australia of economic growth and structural change in East Asia. This includes a section on China and Hong Kong, which concludes that the integration of Hong Kong into the Chinese economy "has been substantially completed". On our return, the Lord President was struck by an article by Christopher Smith in the Financial Times of 3 September, which again underlines the reality of economic links between Hong Kong and China. (I enclose a copy of the two references, though the extract from Garnaut's report obviously needs to be set in the wider context of the whole report he produced).

The reason for writing to you is that the Lord President was struck by the apparent contrast between these two references and the emphasis - entirely appropriate - in his briefing and in his speeches in Australia, on the importance of securing Hong Kong's role as an independent player in the regional economy, with a separate seat in the MFA negotiations, and hopefully separate membership of APEC etc.

The Lord President thinks that the difference is one of emphasis as much as anything else. There is no sign of China beginning a process of disintegration similar to that we may now be seeing in the USSR (and there would clearly be considerable dangers in that as well as short-term economic turbulence). But he thinks that the point developed by Garnaut and Smith justifies the conclusion that Hong Kong's role as a separate economic player in the region could be enhanced by taking into account in its developing role in the region, the strength of the links with China - be it one China, or a more fragmented association of provinces. At all events, he thinks that the idea may be worth encouraging, as a counter-weight to the stress on Hong Kong's continued economic

Ki

SAUTY

1

Page 15Page 16