TNAG-2611-FCO40-3802-International-support-from-the-USA-regarding-the-future-of-H-1992 — Page 46

To:

MR LOVE

From:

JOHN MEADWAY HD/OT2

BAY 746/KH

215 5230

23 June 1992

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Mr Hagestadt OT2/1 Mr Murray OT2/2d Mr Davies FED, FCO Mr Ricketts HKD, FCO Mr Day SBTC, HK Mr Marsden, Washington

CALL ON SECRETARY FOR TRADE AND INDUSTRY, HONG KONG

I had only a few hours for business on my way back from China to the UK through Hong Kong on Friday 19 June but the BTC had kindly fixed me up to see Mr T H (Brian) Chau, Secretary for Trade and Industry in the Hong Kong Government.

2. Most of the call was spent exchanging views and experiences of travelling in China: his visit last year with the Governor had been his first. He also noted that reform in China is leading to something of a flood of private and municipal money from China into the Hong Kong stock market and property market. However the main issue we discussed was China's relations with the US and accession to the GATT.

3. Mr Chau thinks that both the Chinese government and Hong Kong businessmen are over complacent about the issue of US renewal of China's MFN privileges. Last year's Senate group which blocked an override of the President's veto of legislation to interfere with MFN depended on Democratic support which is much less certain this year, and will depend on the President's position and electoral prospects in September. If this vanished, MFN would depend on Republicans rallying round the President on party lines. He thought the Chinese had been foolish to block progress on Taiwanese accession to the GATT in the way that they had, which could only alienate US opinion.

4. When I pointed out that it would be Chinese accession to the GATT that would give them MFN rights with the US permanently, he pointed out that Chinese accession to the GATT would leave their position and MFN still subject to annual Jackson-Vanik votes unless Congress could be induced to repeal this legislation, which appeared unlikely. Mr Chau did not think Mr Perot well disposed to Hong Kong and pointed out that the election of Mr Clinton would be very bad news for them since his policy was such that the dialogue with Congress would start with him proposing conditions to be imposed on -Chinese MFN rights.

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