possibly take include an increase in the flow of illegal immigrants into Hong Kong, and more aggressive anti-smuggling patrolling
around Hong Kong waters.
unlikely.
Agreement on the airport would be
7. But the Chinese also need to bear in mind their own
significant economic interests in Hong Kong, and will want to try to drive a wedge between the Hong Kong Government and the people of
Hong Kong. I therefore doubt that they will disrupt trade or financial links with Southern China, or turn to the more extreme
forms of pressure, such as interference with supplies across the
border. They also seem ready so far to let Sino/British contacts
in other areas continue largely unaffected. We do not know how
long this will last.
8.
The immediate issue is whether support for the Governor's
package will hold up in Hong Kong. At present, the Hong Kong
Government think they can count on the firm support of about half
of LegCo. It will be helpful to have the Governor's assessment on
18 November. So far the markets are resilient (suggesting that investors are taking a long term view). But members of the conservative grouping in LegCo, and some parts of the business
community, are already backing away from support for the Governor's
proposals. We cannot rule out the Chinese engineering a collapse
of business confidence in Hong Kong if they push hard enough, or that they may create such a collapse by miscalculation.
9. We therefore face a long period of struggle. Calm nerves will
be needed. We should continue to show that we are ready to
continue a normal relationship with China, both over Hong Kong and
more generally. The visit here by Vice Premier Zhu Rongji (16-18 November) will be helpful in that. It will give us the chance to
show robust support for the Governor's proposals, and urge the
Chinese to put forward counter proposals rather than just
criticise.
But given Deng Xiaoping's instruction, they will almost
cab.off.SA
SLM
No comments yet.
Private notes are available after approval.