TNAG-2243-FCO40-3224-Most-favoured-nation-status-for-China-impact-on-Hong-Kong-1991 — Page 206

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STATE VISIT TO THE UNITED STATES: SECRETARY OF STATE'S

PROGRAMME IN WASHINGTON 14-17 MAY

MMBO

HONG KONG/CHINA: RENEWAL OF MFN STATUS FOR CHINA

Points to make

13 MAY .J91

-

Understand US concerns at trade deficit with China, human

rights, arms proliferation and intellectual property. Right to press the Chinese strongly on these.

But withdrawal of MFN status for China would damage Hong Kong just when it faces other serious problems: with China over the new airport and "consultation" prior to 1997;

and surge in Vietnamese Boat People. We want Hong Kong's

success story to continue.

69% of China's exports to US pass through Hong Kong: Hong Kong could lose 40,000 jobs; GDP growth could be almost

halved; damage to investment and confidence.

-

Withdrawal of MFN status would also affect US business

interests in Hong Kong. There are over 900 US firms in

Hong Kong (double the number 5 years ago), and the US has

been the largest foreign investor in Hong Kong. And a

stagnant Hong Kong would not help advance Western interests

in China.

-

Hope you will weigh the Hong Kong dimension carefully.

BUSAJS/1

VAS

CONFIDENTIAL