TNAG-2730-FCO40-3936-Future-of-Hong-Kong-constitutional-development-1993 — Page 24

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3.

In the business community, the Chinese have succeeded in

creating widespread opposition to the Governor's proposals,

and in driving down the stock market. The uncertainties may

discourage investors until the prospects are clearer and the

property market may weaken. But the economic fundamentals have not yet been affected.

In the Legislative Council (LegCo), there has so far been a

comfortable majority in support of the Governor's proposals with roughly 30 (out of a total of 60 members) in favour, 20

opposed and 10 undecided. The last category seems to be

growing, with an increasing number of the middle ground looking for a compromise. Any compromise would however be denounced by the 12 LegCo members of Martin Lee's United Democrats, who are watching carefully for any sign of

backsliding by the Governor or HMG. Some LegCo members have

already put forward alternative proposals on parts of the electoral package. Others are intending to do so. These will be considered by LegCo alongside the Governor's

proposals, which will be introduced in February. The process in LegCo could take several months.

Internationally, the proposals have strong support in the US,

Canada and Australia and (in private) from Japan and some EC

partners. In the UK there was some adverse comment in the recent Lords Debate. However, there has been no serious challenge to the

Government's policy from Westminster or the media.

4.

The Chinese took an increasingly harsh position in the period before Christmas. They said that the Governor must withdraw his proposals as a precondition for any discussions. They kept up a virulent propaganda campaign against the Governor personally and his proposals, and have put pressure on businessmen and LegCo members. They cast doubt publicly on the continuing validity of contracts and franchises spanning 1997, and denounced Jardines.

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