CONFIDENTIAL
agreed that this is one of the main reasons why Hong Kong has
been able to increase its exports to the US during the US
recession. He considered that an inflation rate in Hong Kong of
8-9%, although high compared with competing economies, poses no threat to Hong Kong's competitiveness in the short to medium
term.
4.
Another point made during the lunch worth reporting is that, unlike the early 1980s, Hong Kong banks are not over-exposed to
the commercial and residential property markets and are thus much better placed to withstand any decline in property asset
values.
5. In short, there is still a lot of good economic news around
for Hong Kong. But I think they tend to underestimate the
possible knock-on effect on international business confidence in
Hong Kong of a serious slowdown in the Chinese economy.
If you agree, we will look for a suitable means of injecting this thought, without appearing as doom-sayers.
Labell
PF Ricketts
heat.min.ADM
SLM
CONFIDENTIAL
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