TNAG-2445-FCO40-3560-Internal-political-situation-in-Hong-Kong-1992 — Page 41

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MDHIAN 5782

MARS 011/3

Political

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FM HONG KONG

TO DESKBY 06110OZ F C O

TELNO 697

OF 060955Z MARCH 92

INFO PRIORITY UKREP JLG HONG KONG, PEKING

FOLLOWING FOR SECRETARY OF STATE FROM LORD CAITHNESS

UKREP JLG PERSONAL FOR AMBASSADOR

PEKING PERSONAL FOR AMBASSADOR

CONCLUSIONS FROM MY VISIT TO HONG KONG

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1. IN ADVANCE OF QIAN'S VISIT, I SHOULD LET YOU HAVE MY INITIAL IMPRESSIONS AFTER A FULL WEEK OF DISCUSSIONS IN HONG KONG.

ECONOMIC ISSUES

2. THERE WERE TWO PIECES OF GOOD NEWS DURING MY VISIT ON THE ECONOMIC FRONT. FIRST, HAMISH MACLEOD WAS ABLE TO PRESENT AN ENCOURAGING PICTURE IN HIS FIRST BUDGET, WITH GROWTH SET TO HIT 5 PER CENT IN 1992, AND THE RESERVES FORECAST TO BE WELL ABOVE THE DOLLARS 25 BILLION MINIMUM IN 1997 DESPITE ALL THE EXPENDITURE ON THE AIRPORT. IT IS SYMPTOMATIC OF THE PROBLEMS FACED BY THE HONG KONG ADMINISTRATION THAT THIS SENSIBLE BUDGET HAS IMMEDIATELY BEEN ASSAILED FROM DIFFERENT DIRECTIONS BY LU PING AND BY HONG KONG POLITICIANS. (LU PING'S MEDDLING HAS CAUSED QUITE A FURORE HERE, AND I THINK YOU SHOULD SAY PRIVATELY TO QIAN THAT RECENT SIGNS OF A RETURN TO PUBLIC CHINESE SNIPING AT HONG KONG ARE NOT HELPFUL.)

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THE SECOND PIECE OF GOOD NEWS WAS THE LAUNCH OF THE MASTERPLAN FOR THE NEW AIRPORT, INCLUDING THE AWARD OF THE CONTRACT FOR DESIGNING THE TERMINAL BUILDING TO A BRITISH-LED GROUP. AWARD OF THE BIGGEST CONTRACTS - FOR THE BRIDGE AND THE AIRPORT PLATFORM · ARE STILL TO COME. BUT THE PROJECT IS TAKING SHAPE, AND I WAS IMPRESSED BY THE PROFESSIONALISM AND FLAIR OF THE PROVISIONAL AIRPORT AUTHORITY AND THE MASS TRANSIT RAILWAY CORPORATION WHO WILL BE BUILDING THE AIRPORT RAILWAY. SO FAR SO GOOD ON THE AIRPORT PROJECT. BUT THE MOMENT OF TRUTH IS NEARING IN THE SENSE THAT IT WILL SOON BE NECESSARY TO RAISE HARD CASH IN

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