TNAG-2621-FCO40-3812-Visits-by-Alastair-Goodlad--Minister-of-State-for-Foreign-an-1992 — Page 67

CONFIDENTIAL

FM HONG KONG

TO IMMEDIATE FCO

TELNO 1369

OF 20120OZ MAY 92

INFO PRIORITY BTC HONG KONG

CONFIDENTIAL

024064

MDHIAN 4746

PART ONE OF TWO PARTS

YOUR TELNO 764: MR. GOODLAD'S VISIT TO HONG KONG: MOOD OF THE COMMUNITY

SUMMARY

CONFIDENCE IN THE TERRITORY IS AT PRESENT RELATIVELY HIGH. THE MAIN REASONS FOR THIS ARE THE ROBUST STATE OF THE ECONOMY AND THE BOOMING TRADE PROSPECTS FOR THE MONTHS AHEAD. THE RENEWED CAMPAIGN BY DENG XIAOPING FOR ECONOMIC REFORM IN CHINA HAS ALSO ENHANCED BUSINESS CONFIDENCE. ON THE POLITICAL FRONT, THE PUBLIC HAS BEEN REASSURED THAT HKG CAN CONTINUE TO SECURE LEGCO MAJORITIES DESPITE MORE CONTENTIOUS DEBATES. THE RE-ELECTION OF THE CONSERVATIVE GOVERNMENT, LEADING TO THE RAPID APPOINTMENT OF MR PATTEN AS THE GOVERNOR-DESIGNATE, HAS ALSO REMOVED SOME UNCERTAINTIES, ALTHOUGH A PERCEPTION REMAINS THAT HMG WISHES TO PUT BRITISH INTERESTS AHEAD OF THOSE OF HONG KONG. THE MAIN LOCAL COMMUNITY ANXIETY AT PRESENT IS THE PROBLEM OF CROSS-BORDER CRIME, USUALLY INVOLVING HEAVILY-ARMED GANGSTERS FROM THE MAINLAND.

THE ECONOMY

2.

THE HONG KONG ECONOMY IS MOVING INTO A PERIOD OF RAPID GROWTH. RECENT DATA SUGGEST THAT IT SHOULD BE POSSIBLE TO ACHIEVE COMFORTABLY THE GOVERNMENT'S PREDICTION OF 5 PER CENT GROWTH FOR 1992/93. TOTAL EXPORTS IN THE FIRST QUARTER OF 1992 WERE 21 PER CENT HIGHER IN REAL TERMS THAT FOR THE SAME PERIOD IN 1991.

3.

Tak

―

INFLATIONARY PRESSURE ON CONSUMER PRICES A MAJOR PUBLIC ANXIETY OVER THE PAST TWO YEARS HAS STARTED TO EASE. DESPITE A SHARP GROWTH IN CONSUMER SPENDING AND BANK LENDING AT THE START OF THE YEAR, THE CONSUMER PRICE INDEX ROSE BY 9.5 PER CENT IN MARCH, ITS LOWEST MONTHLY INCREASE SINCE SEPTEMBER 1990. UNEMPLOYMENT IS LOW, AND STEADY AT JUST OVER 2 PER CENT.

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CONFIDENTIAL