SECRET UK EYES A LOCSEN
In Attendance: Capt TL Sunter RN (CAPIC Hong Kong [des])
ITEM 1
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INTRODUCTION
1. The Chairman welcomed all the members of the Committee, and regretted that the meeting had had to be delayed since February as a result of Op GRANBY. However, he did not feel that this had been detrimental although it was strictly outside the Committee's remit to meet every 6 months. He particularly welcomed this meeting as providing an opportunity for a broad exchange of views on the draft 1991 Review of the Hong Kong Withdrawal Plan.
2. The Chairman then turned to Mr Paul, Head of the Hong Kong Department of the FCO and invited him to review the political scene.
3. Mr Paul began by saying that much time had elapsed since the last meeting and things had not been easy for Hong Kong. Superficially, Hong Kong had emerged from the Tiananman Square incident in a dynamic way; business confidence and turn-overs were at a high level. But emigration was also still high. The Nationality package had been a stabilising factor although the take up had not been as high as expected, but overall the results had been satisfactory. Unfortunately, these hopeful signs had been overtaken by the difficulties experienced with the PRC over financial aspects of the airport project; although clearly the PRC's real interests went much wider. The PRC had elevated their ostensible concern with the financing of the airport to a point of principle, and a symbol of Chinese right to be consulted. Their principle interest was in how
Hong Kong was governed between now and 1997. Mr Paul explained that when the Foreign Secretary had visited Peking he had taken a number of proposals, but no agreement was reached because of the airport issue. There had been yet further talks which had also been unsuccessful and the way forward was unclear at present. The HKG was in an extremely difficult position, particularly as contracts were due to be let to companies etc. Unless a way through could be found, the future for Hong Kong was bleak with worrying implications for confidence, and possibly political stability. We had reached a crossroads.
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