TNAG-2467-FCO40-3591-Economic-situation-in-Hong-Kong-1992 — Page 50

CODE 18-77

Miz adlı

Reference.

Mr Whitney Mr Ricketts

An interesting paper

I have added a

few commenti

P: Jeth.

cyainst

the

text

16/0.

HONG KONG AS A REGIONAL FINANCIAL CENTRE

You asked for any comments on the attached paper from the Bank of England.

1.

2.

It is a good factual paper, as well as one that attempts to consider the various merits of Hong Kong as compared with Singapore. Mr Whitney may wish to read it as an introduction to this area of our work.

3. The paper argues that, assuming China continues to look outwards and to develop a market economy, Hong Kong will do well but as a provider of finance and services to China rather than a regional centre (paras 1.6 and 1.7). The Bank should be in the best position to make such an assessment, but it is not entirely clear to me why this should be the effect. Will the need to supply China crowd out other business, or will Hong Kong come to seen as not having expertise for other Asian areas? Not that convincing to a layman.

4.

The papers identify considerably more areas of possible uncertainty in Hong Kong's future than in Singapore's- reestablishment of conservative influences in China, UK-Sino-Hong Kong tensions, social unrest in Hong Kong, sinification of Hong Kong, and Chinese interference in Hong Kong. (But it is really only is Section 3 on Supply Factors that the papers find Hong Kong behind Singapore- on the other 2 Sections, Hong Kong comes out on top.) This is a common refrain for those who are outside Hong Kong. But in my limited and humble experience, business is not usually that bothered about the political situation as long as they think it will be business as usual. The farther the Chinese go down the track of reforming their economy, the more impossible it will be for them to go back. I think they have reached the point of no return already and Hong Kong will continue to thrive.

Mill vätere

Michael V Stone Hong Kong Department

16 October 1992