TNAG-2607-FCO40-3798-International-support-from-Japan-regarding-the-future-of-Hon-1992 — Page 14

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AND TO DESKBY 18010OZ HONG KONG

INFO IMMEDIATE PEKING, UKREP JLG HONG KONG

YOUR TELNO 882: HONG KONG/JAPAN

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1 Thank you for the suggestions in your TUR. Subject to any points from the Governor, please pass the following message to Ikeda from Sir J Coles. Message begins:

I understand from the Governor of Hong Kong that he had a most useful visit to Tokyo. I wanted to let you know how grateful we are for the consistent support we receive from Japanese Ministers and officials on the Hong Kong issue.

Japan is uniquely well placed to explain to China the realities of international business confidence in Hong Kong. We greatly value your many helpful interventions in the past.

The

The Governor will have brought you up to date on his thinking. But you may find it useful to have our impressions of the present situation in Hong Kong. The Governor's proposals continue to attract steady support from the community (by a margin of about 2:1 according to a series of opinion polls). business community are understandably anxious to see the current difficulties resolved soon. But the economic fundamentals in Hong Kong remain sound. As you know, the Chinese have reacted harshly to the Governor's proposals and the fact that he announced them before engaging in detailed discussion with the Chinese. Their statement casting doubt on the validity of government contracts and franchises stretching beyond 1997 is inconsistent with the Joint Declaration and the Basic Law. Their demand that the Governor should withdraw his proposals as a pre- condition for any discussion is wholly unrealistic. The Governor has of course emphasised that his proposals are just that: proposals for discussion, and the Governor would be happy to discuss any alternative proposals China may have for the elections in 1995 which would be open, fair and acceptable to

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