Mr
Hum Ninte
CONFIDENTIAL
FROM: P F Ricketts
Hong Kong Department
DATE: 14 July 1993
cc: Sir J Coles
Mr Fry, FED
Mr Wye, RAD
CHINESE ECONOMY: WILL HONG KONG FEEL THE HEAT?
A
1. You will have seen Hong Kong Telno 1 to Tokyo (copy
attached) which assesses as a curtain-raiser to the Secretary of State's visit to Peking the possible impact on the Hong Kong economy of tighter monetary policy in China. I did not want to chip in during the Secretary of State's visit, but the analysis
struck me as a touch rose-tinted.
2.
I have now consulted Economic Advisers. They agree generally with the economic analysis in the telegram. They consider that the Chinese authorities are adopting a sensible
set of measures which, if properly implemented, should enable
the Chinese economy to experience a soft landing. However, they
consider that any significant credit squeeze in China is likely
to lower asset values in Hong Kong, particularly in the over-heated property market and in the share market. They
anticipate a reduction in demand for Hong Kong goods in China
which would have an impact on exports, the extent of which would
depend upon the severity of the squeeze. They agree with Hong
Kong that there is no current threat to monetary stability.
heat.min.ADM
SLM
CONFIDENTIAL
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