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Mood in Hong Kong now better.
But hope Japanese will
continue to remind the Chinese of the importance of their actions and statements for international business confidence
and thus for Hong Kong's future prosperity.
We are trying to allay Chinese suspicion of the new LegCo and of calls for more democracy. Hard for China to
understand principle of democratic opposition. But we have to persuade them that Hong Kong's political freedoms are
vital to its economic success: strong, autonomous Hong Kong
institutions give confidence to the international community. China needs to win the trust of Hong Kong people and politicians, not to alienate them: a more reformist Chinese leadership may see this more clearly, meanwhile grateful for anything Japan can do to help dispel Chinese conspiracy
theories.
- A separate Hong Kong/Japan Air Services Agreement (ASA) will be good for confidence in Hong Kong: pleased to see that a working group will meet early in the New Year.
Defensive Points
- (EGCD cover?) Cover for medium/long-term credit business is available subject to usual exposure controls.
(If pressed on Lantau Fixed Crossing) ECGD have provided an indication of cover in principle to interested British companies.
(Validity of HKG contracts etc beyond 1997?) Joint Declaration and Basic Law (particularly Article 160) provide all necessary reassurance. Because of size of airport
-
project and controversy surrounding it, the Airport Memorandum of Understanding adds specific assurances that
the SAR Government will honour the obligations the
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