TNAG-2473-FCO40-3600-Asian-Development-Bank-liabilities-of-Hong-Kong-1992 — Page 61

CONFIDENTIAL

ASIAN DEVELOPMENT BANK: 25TH ANNUAL MEETING OF THE BOARD OF

GOVERNORS HONG KONG, 4-6 MAY 1992

HONG KONG:

BACKGROUND:

Economy

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Hong Kong's economy is buoyant, both stimulating, and

encouraged by, the economic boom in South China. Growth for

1992 is forecast at 5%. Inflation remains high at 10% and

although is starting to fall, is likely to remain high for a number of years. Business confidence in Hong Kong has returned following the signing of the Airport MOU during the visit to China by the Prime Minister last year. Hong Kong is now the 10th largest trading economy in the world.

New Airport and Related Projects

The Hong Kong Government have embarked on major infrastructure developments to equip Hong Kong for the 21st century. These include a new airport, expanded port facilities and an improved road and rail network.

Discussions, at times, acrimonious, were held over a number of months with the Chinese about the airport. Both sides agreed Hong Kong needs a new airport and both wanted to preserve stability and prosperity, with a strong and

effective Hong Kong Government. But the Chinese tried to

use the opportunity to increase their say in Hong Kong affairs pre-1997.

Agreement was finally reached on the airport project at

meetings on 30 June 1991 in Peking and the Prime Minister

and Chinese Premier signed a Memorandum of Understanding

ALKADA/1

JRB

CONFIDENTIAL