TNAG-2474-FCO40-3604-Business-matters-in-Hong-Kong-acquisition-of-Midland-Bank-by-1992 — Page 24

RESTRICTED

FM FCO

TO PRIORITY PEKING

TELNO 507

OF 19180OZ JUNE 92

RESTRICTED

MMAB3 102/2

INFO PRIORITY HONG KONG, BTC HONG KONG, SHANGHAI

FROM FED

36

133252

MDLOAN 8805

ли

Mr for our

Mr Etapa 24/6

Remarkall paritine

& MSSC, all it all..

拳

a MJBC fle

CALL ON THE FOREIGN SECRETARY BY GOVERNOR OF THE PEOPLE'S BANK OF CHINA

SUMMARY

1.

LI GIVES ACCOUNT OF ECONOMIC REFORM. SOME CONCERN OVER INFLATION. DECREASING ROLE FOR GOVERNMENT IN MANAGEMENT OF ENTERPRISES. EXPRESSES CONCERN OVER HKSB'S PLANS AND NEED TO RETAIN CONFIDENCE OF HONG KONG PUBLIC. FOREIGN SECRETARY SAYS THE CHINESE SHOULD BE REASSURED. NO WEAKENING OF HKSB'S ROLE IN HONG KONG.

DETAIL

2.

GOVERNOR LI GUIXIAN AND FIVE OTHERS INCLUDING DEPUTY GOVERNOR BAI AND THE CHIEF REPRESENTATIVE, ZHANG ZHIXIANG, OF THE BANK'S NEWLY OPENED REPRESENTATIVE OFFICE FOR EUROPE, AND THE PRESIDENT OF THE BANK OF CHINA CALLED ON THE FOREIGN SECRETARY ON 17 JUNE FOR THIRTY MINUTES.

3.

THE FOREIGN SECRETARY SAID WE WERE ANXIOUS TO INTENSIFY HIGH-LEVEL CONTACTS. THE PRIME MINISTER AND LI PENG HAD MET IN RIO. GOVERNOR LI WAS WELL-PLACED TO UPDATE US ON THE ECONOMIC

SITUATION IN CHINA.

4.

SEIZING ON THIS OPENING, LI EMBARKED WITH RELISH ON THE STANDARD QUOTE BRIEF INTRODUCTION UNQUOTE, TREATING THE SECRETARY OF STATE TO A LENGTHY HISTORY OF CHINESE REFORM BACK TO 1978, PEPPERED WITH IMPRESSIVE STATISTICS AND ENDING WITH DENG'S LATEST CALLS TO ACCELERATE REFORM.

5.

THE PLAN NOW WAS TO REJUVENATE STATE-OWNED ENTERPRISES TO MAKE THEM REALLY PRODUCTIVE AND TO REDUCE GOVERNMENT INTERFERENCE IN MANAGEMENT. REFORM AFFECTED THE FINANCIAL SECTOR TOO,

1

PAGE RESTRICTED

File

22/6