TNAG-2307-FCO40-3343-UK-inward-investment-in-Hong-Kong-1991 — Page 101

CONFIDENTIAL

FM HONG KONG

TO PRIORITY FCO

TELNO 25

OF 041039Z JANUARY 91

INFO PRIORITY BTC HONG KONG

18

90/MACIL/5

CONFIDENTIAL

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062025

MDLIAN 8290

1991OP COPY

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YRTELNO 2445 OF 1990: PROMOTION OF UK INWARD INVESTMENT: HONG

KONG

1. I AGREE WITH THE RECOMMENDATIONS IN THE DRAFT REVISED HONG KONG GUIDELINES, PARTICULARLY THE POINT THAT ANY PROMOTIONAL ACTIVITIES IN HONG KONG SHOULD AVOID GIVING THE IMPRESSION OF THE

UK SEEKING TO EXPLOIT LOCAL CONCERNS ABOUT THE TRANSFER OF SOVEREIGNTY IN 1997.

2. WE HAVE SOME ADDITIONAL COMMENTS ON PARA 4 OF THE DRAFT

GUIDELINES:

(A) FIRST SENTENCE - WHILE SUBSTANTIAL SUMS OF MONEY FLOW INTO AND OUT OF HONG KONG EVERYDAY, THERE IS NO EVIDENCE OF ANY NET OUTFLOW. ALTHOUGH WE HAVE NO FIGURES ON THE GROSS FLOWS, THE STABILITY OF THE EXCHANGE RATE INDICATES THAT THERE IS A ROUGH BALANCE. WITHIN THE LOCAL ECONOMY, THERE HAS BEEN SIGNIFICANT GROWTH IN PRIVATE SECTOR CAPITAL INVESTMENT AT AN AVERAGE ANNUAL RATE OF 10 PERCENT OVER THE PAST FIVE YEARS. ALSO, THE MOST RECENT HONG KONG GOVERNMENT INDUSTRY DEPARTMENT SURVEY SHOWED THAT THERE WAS AN INCREASE OF 14 PERCENT IN OVERSEAS INVESTMENT

IN HONG KONG'S MANUFACTURING SECTOR IN 1989.

(B) SECOND SENTENCE

-

IF

IN OUR VIEW BUSINESS CONSIDERATIONS ARE THE KEY FACTORS FOR HONG KONG COMPANIES EXPANDING OVERSEAS. UNCERTAINTY ABOUT THE FUTURE WAS THE MAIN REASON, THERE WOULD NOT HAVE BEEN SUBSTANTIAL INVESTMENT FROM HONG KONG IN CHINA.

3. WE UNDERSTAND BTC WILL BE RESPONDING SEPARATELY.

WILSON

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