TNAG-2146-FCO40-3065-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-1990 — Page 20

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Contacts were also afraid that HKG would increase taxes, and

cut other public expenditure to finance the project. Other

contacts also worried over the possibility of an economic re-

cession in the coming decade, which could create difficulties for HKG in implementing the scheme. Some contacts still sup- ported the project despite Chinese objections, and were con- fident HKG, with its past record, and performance would be able to carry out the project, which were worth pursuing, as they would

have long term financial benefits to the Territory. Con-

tacts thought the project should be considered as an investment, rather than a liability. Contacts did concede that since the

project extended beyond 1997, China's concern was understandable, and contacts thought that HKG and the CPG should step up liaison on the project, but discussions should be held in a low key

manner.

Hong Kong and Shanghai Bank Restructuring

5. Most respondents across the urban areas were surprised and dismayed at the news of the shift in the Bank's domicile.

Respondents generally saw the move as an indication that even

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the Quasi-central Bank of Hong Kong had doubts about the future of the Territory, and confidence had been dealt yet another

blow. Some respondents are worried that other commercial

concerns may follow the Bank's example, and foreign investors would be frightened away. Other respondents said the move

was understandable, having regard to the Banks' previous ex- perience in 1949, when its assets in Shanghai were taken over by the CPG. Respondents thought too the move would be bene-

fincial to the Banks' shareholders, as its overseas assets would

be out of reach of the SAR Government. Many respondents pre-

dicted the Bank would lose its " Quasi-central

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role after 1997.

6. The initial reaction in Southern to the Bank restructuring

move was one of surprise. Contacts saw the move as an act of

betrayal, and an open admission of lack of confidence. Con-

tacts thought if the " Lion Bank was moving out, what con- fidence could people have in the banking system. Contacts

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/ said....

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