TNAG-2242-FCO40-3223-Most-favoured-nation-status-for-China-impact-on-Hong-Kong-1991 — Page 40

CODE 18-77

Mr CE Lane

Economic Advisers

Reference

CONFIDENTIAL

ALGACD/VAS

MAR 090/4

Tite

32

MFN STATUS FOR CHINA AND THE AIRPORT PROJECT

1.

HM Ambassador to Peking suggested in Peking telno 575 (para 6) that China's continued anxiety over US MFN status might be used as possible leverage in our current difficulties with the Chinese authorities.

2.

He questioned the Chinese argument that the preservation of China's MFN status is vital to the economy of Hong Kong to the extent that the argument rests presumably on the blanket removal of MFN priveleges. He asked if there might be any scope for selective withdrawal by the US Administration of MFN from purely Chinese producers, carefully avoiding harming the commercial interests of Hong Kong Joint Ventures or re-exporters.

3. I would be grateful for your views as to whether this might be feasible and practicable, and what if any retaliatory action China might be able to take against Hong Kong once she became aware of what was happening.

Attached are copies of some relevant background papers which you may find useful.

4.

11/d/wor

T Furness

Hong Kong Department WH303

270 2653

29 April 1991

CONFIDENTIAL