Redacted Under FOI
CONFIDENTIAL
Exemption Sec 27(1)(a)(c)(d)
18
The
announcement last month that Peking is establishing a system
of Transitional Affairs Advisers, (neutral or pro-China
people who would advise the Chinese Government on a personal basis on Hong Kong development) may well be another part of an emerging Chinese game-plan for vetting the suitability of
potential future leaders for the SARG.
16.
Issues for Discussion: Do we accept the principle of
maximum continuity in the Civil Service through 1997, and
hence the need to discuss with the Chinese nearer to that date those Principal Officials whom they could accept in top jobs? There are clearly sensitivities: some in LegCo would
present this as pre-cooking with China choices which should
be left to the Chief Executive. There may be tactical
advantage in continuing to leave the Chinese to make the
running on this issue, and therefore not take an initiative
to raise it with Qian in March. But a marker about not
allowing the Transitional Affairs Advisers to become a
shadow administration would be timely. Should we try to
pre-cook with the Chinese in due course a Chief Executive?
(iv) The Economy including the Airport
t
17.
Hong Kong's economy is now growing strongly again
(4.5% in 1991). Unemployment remains very low. Inflation
has come down from its peak of 13.9% to 10.1% in December.
It is concentrated mainly in non-tradables such as services and property. Tradable goods have stayed more competitive,
partly because of the continuing shift in manufacturing industry to the lower wage area of Guangdong province.
18. Hong Kong's fiscal management is constrained by two
main factors:
the undertakings to the Chinese that fiscal reserves in
FIZABP/6
CONFIDENTIAL
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