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convinced that there is a case for changing them, although we naturally keep the matter under review. the question of fluctuating exchange rates, we see no present justification for contemplating any sterling link or safeguard for pensions. The Hong Kong dollar link with the US dollar has proved extremely resilient. Hong Kong pensioners continue to do reasonably well, certainly in comparison with their UK public service counterparts and with HMOCS staff in receipt of pensions from other territories. The US dollar/pound rate has certainly fluctuated but I do not believe that these fluctuations have led to cases of hardship. In any case the Hong Kong Government have stated that if hardship were to arise, they would propose to ExCo that a small fund be established to provide one-off payments to pensioners in distress.
(iv) We fully appreciate the concerns of HMOCS members about their position after 1997. We are giving very careful thought to how we can meet them. We are not yet in a position to make an announcement but intend to do so as soon as possible.
(v) It is true that a small number of very senior posts will be reserved for Chinese nationals. It was always envisaged that this would be so and the Joint Declaration makes this clear. The Hong Kong Government have instituted a limited compensation scheme which will provide appropriate compensation if it becomes necessary for expatriate officers to retire early or to be passed over for promotion to facilitate localisation. I believe the Hong Kong Government have considered this area very carefully and sympathetically and the position of expatriate officers who may be so affected has been fully taken into account.
I was interested to see that you are also going on to visit Guangdong province. I am sure this will be an interesting visit. Guangdong has been at the forefront of changes in the Chinese economic policy in recent years and is one of the most dynamic regions of China. It is also of course closely linked to the Hong Kong economy with which it has substantial trade and investment connections.
By way of briefing, I enclose a copy of our current background briefing on China together with a provincial profile on Guangdong. The briefing includes material on
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