TNAG-2470-FCO40-3594-Budget-of-Hong-Kong-1992 — Page 97

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DID NOT SEE WHY WE MADE THE ACCUSATION OF INTERFERENCE AND THEY WERE SORRY TO HEAR THAT WE WERE SURPRISED BY LU PING'S WORDS.

7. EHRMAN REPEATED THAT OUR BUDGETARY PRINCIPLE WAS TO KEEP GROWTH OF EXPENDITURE IN STEP WITH THE RATE OF ECONOMIC GROWTH. HE DID NOT INTEND TO COMMENT ON THE BASIC LAW, ALTHOUGH HE NOTED IN PASSING THAT WONG PO-YAN, WHO HAD BEEN THE CONVENOR OF THE BASIC LAW DRAFTING COMMITTEE SPECIAL GROUP ON ECONOMIC SYSTEM, WAS REPORTED TO HAVE SAID PUBLICLY THAT THERE WAS NO INCONSISTENCY BETWEEN MR MACLEOD'S BUDGET AND ARTICLE 107 OF THE BASIC LAW. HOWEVER, LEAVING THAT ON ONE SIDE, THE BASIC LAW ONLY CAME INTO EFFECT IN 1997. PUBLIC POLEMICS WERE NOT CONDUCIVE TO OUR CO-OPERATION. FAR BETTER TO HAVE QUIET DISCUSSION IN THE CONFIDENTIAL FINANCIAL DIALOGUE.

8.

YANG SAID THAT HE HAD NOTED OUR POINTS. HE RESERVED THE

RIGHT TO MAKE A FURTHER RESPONSE.

WILSON

YYYY

MAIN

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DISTRIBUTION

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.HONG KONG AIRPORT RESTRICTED

HKD

PLANNERS//HD

RAD//MR WYE

LEGAL ADVISERS//MISS BROOKS PUSD//HD

PS

ECONOMIC ADVISERS//HD

PS/LORD CAITHNESS PS/PUS

ERD//HD

FED//HD

NEWS D//HD

SIR J COLES

MR BONE

MR BURNS

ADDITIONAL

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SIR P CRADOCK (NO 10)

MS D CORNER CABINET OFFICE

MR ELSTON BANK OF ENGLAND MR MCINTYRE HMT

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