TNAG-2730-FCO40-3936-Future-of-Hong-Kong-constitutional-development-1993 — Page 109

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AND TO DESKBY 06010OZ PEKING, JLG HONG KONG

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025774

MDHOAN 6730

PERSONAL FOR GOVERNOR FROM RICKETTS, HKD

PEKING PERSONAL FOR COX

UKREP JLG PERSONAL FOR GALSWORTHY

SUVA PERSONAL FOR PS/MR GOODLAD

PART ONE OF TWO

MIPT:

HONG KONG: DRAFT OPD (K) PAPER

FOLLOWING IS REVISED DRAFT:

1. THIS NOTE TAKES STOCK OF DEVELOPMENTS SINCE THE COMMITTEE DISCUSSED HONG KONG ON 18 NOVEMBER, AND SUMMARISES THE GOVERNOR'S PLANS FOR SECURING THE OBJECTIVES WE HAVE ALREADY AGREED. NO NEW DECISIONS ARE REQUIRED AT THIS STAGE.

2. THE STATE OF PLAY IN HONG KONG IS AS FOLLOWS:

IN THE COMMUNITY AS A WHOLE, RECENT POLLS SHOW THAT SUPPORT FOR THE GOVERNOR HAS HELD UP REASONABLY WELL (BY A MARGIN OF ABOUT 2:1), ALTHOUGH THERE HAS BEEN SOME DECLINE IN THE ABSOLUTE LEVEL OF SUPPORT

IN THE BUSINESS COMMUNITY, THE CHINESE HAVE SUCCEEDED IN CREATING WIDESPREAD OPPOSITION TO THE GOVERNOR'S PROPOSALS, AND IN DRIVING DOWN THE STOCK MARKET (16 PERCENT DOWN IN RECENT WEEKS, COMPARED TO A RISE OF 46 PERCENT OVER THE PREVIOUS YEAR). THE PROPERTY MARKET IS ALSO WEAKENING. THE UNCERTAINTIES MAY DISCOURAGE INVESTORS UNTIL THE PROSPECTS ARE CLEARER. BUT THE ECONOMIC FUNDAMENTALS HAVE NOT YET BEEN AFFECTED.

IN THE LEGISLATIVE COUNCIL (LEGCO), THE LIBERALS (ROUGHLY 30 OF THE 60 MEMBERS) SUPPORT THE GOVERNOR'S PACKAGE, ALTHOUGH MARTIN LEE'S UNITED DEMOCRATS HAVE SAID THAT

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