TNAG-2471-FCO40-3595-Confidential-talks-between-the-UK-and-China-regarding-financ-1992 — Page 31

SECRET

112527

MDLOAN 8272

SECRET

FM FCO

TO PRIORITY HONG KONG

TELNO 272

OF 20153OZ FEBRUARY 92

INFO PRIORITY PEKING, UKREP JLG HONG KONG

TOP COPY Q DIST?

the shore 26/2

Ара

in

26/2

PERSONAL FOR GOVERNOR FROM RICKETTS, HKD PEKING: PERSONAL FOR AMBASSADOR

UKREP: JLG PERSONAL FOR GALSWORTHY

YOUR TELNO 492: CONFIDENTIAL FINANCIAL DIALOGUE

1. THANK YOU FOR THIS FULL REPORT OF THE MEETING: THIS CHANNEL CLEARLY CONTINUES TO WORK WELL.

EXCHANGE FUND

2. WE NOTE THAT WHEN SECRETARY FOR MONETARY AFFAIRS SUGGESTED THAT YOU INTENDED TO ANNOUNCE DISCLOSURE OF THE EXCHANGE FUND ASSETS DURING THE BUDGET SPEECH, CHEN SAID THAT THIS WAS TOO SOON FOR THE CHINESE. HE REVERTED TO THIS ISSUE AGAIN LATER.

3.

YOU WILL RECALL OUR VIEWS ON TIMING AND THE CHINESE DIMENSION. UNLESS THERE ARE OVER-RIDING REASONS WHY THE DISCLOSURE SHOULD BE MADE IN THE BUDGET SPEECH, WE THINK IT WOULD BE PREFERABLE TO DELAY THE ANNOUNCEMENT IF THE CHINESE HAVE DIFFICULTY WITH IT. IT WOULD BE UNFORTUNATE TO SOUR THE ATMOSPHERE OF THIS DIALOGUE: PARTICULARLY DURING QIAN QICHEN'S

VISIT TO LONDON.

4. IF YOU WISH TO LINK THE ANNOUNCEMENT TO THE BUDGET DEBATE, COULD THE FINANCIAL SECRETARY MAKE SOME ANNOUNCEMENT IN HIS WINDING UP SPEECH HAVING FIRST ENSURED THAT AN APPROPRIATE AND INNOCUOUS QUESTION IN CHINESE EYES HAD BEEN ASKED BY A MEMBER? OR COULD YOU COMPROMISE BY ANNOUNCING THE DECISION TO PUBLISH IN THE BUDGET SPEECH BUT NOT ACTUALLY PUBLISHING THE FIGURES UNTIL LATER, EG AFTER THE AUDIT OF THE 1991 ACCOUNTS? WOULD THIS MEET THE CHINESE CONCERN? ARE THERE OTHER REASONS WHICH MIGHT PERSUADE THEM THAT THERE IS A REAL NEED TO HURRY THINGS?

BANKNOTE ISSUE