dr/February/6.26
CONFIDENTIAL
The conclusions thus for are relatively comforting in
rebbia to UK exposures.
1.
MR GRAY
2.
But prospects for Glue..
CHANCELLOR business openings
cold be
bicilly hit. And the partitity of
Deal Qu
FROM: J P MCINTYRE (MG1) DATE: 19 March 1993 EXT: 4699
CC
two prinde secher business casualties won't be ruled out. But in most cases it cold be
Sir T Burns Sir N Wicks Mr H P Evans Mr Gieve o/r Mr Mortimer Mr Wood
ECGD whether the companies that took the hit. Mr Page (Bank)
HONG KONG:
Rab 1913
IMPLICATIONS OF A BREAK WITH CHINA
You asked for an assessment of the implications of a serious break
in relations with China. This note has been prepared with the
help of FCO, the Bank, DTI, and ECGD. It calls for no decisions.
We intend to provide some further analysis of key UK interests when additional work by DTI and the Bank has been completed.
Background
2.
Patten's
Tensions over Hong Kong have arisen from Mr
proposals, announced last Autumn, for changes in the electoral system; these would come into effect for the 1995 Legislative
Council elections, the last before the 1997 hand-over.
Mr Patten's aim was to introduce a stronger democratic element into the system without breaching agreements with China, which had restricted the number of directly elected seats to 20 out of 60.
3.
In
China has reacted strongly to the proposals. Their reaction triggered a sharp fall in the stock market before Christmas.
the New Year, with signs that the Chinese might be moderating their stance, the Hang Seng recovered the lost ground, peaking at
over 6,500 on 10 March, a rise of over 30 per cent on the
pre-Christmas low.
4.
However, it has not so far been possible to reach agreement
with China on the basis for talks about the constitutional
proposals. In the light of this, Mr Patten and the FCO decided to
go ahead last week with the first stage ("gazetting") in the legislative process. This triggered a sharp reaction from Chinese
CONFIDENTIAL
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