RESTRICTED
HWB
"RY
FEB 1993
3
151332
MDLIAN 3195
RESTRICTED
FM BTC HONG KONG
TO PRIORITY FCO TELNO 55
OF 100936Z FEBRUARY 93
Len
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INFO PRIORITY DTI, PEKING, ATTC TAIWAN, TREASURY, ECGD, INFO PRIORITY BANK OF ENGLAND, ODA
TREASURY FOR MORTIMER.
BUSINESS ROUND-UP: HONG KONG.
SUMMARY
1. GENERAL OPTIMISM ABOUT PROSPECTS FOR 1993, THOUGH EXPECTATION OF A BUMPY RIDE OVER THE NEXT FEW MONTHS AS LEGCO DEBATES CONSTITUTIONAL PROPOSALS. MAJOR INVESTMENT INTENTIONS BY LEADING BRITISH COMPANIES. STATEMENTS BY CHINA THAT HONG KONG MAY BE LEFT BEHIND IN DEVELOPMENT OF PEARL RIVER DELTA SHOULD NOT BE DISMISSED: HONG KONGERS PLACING THEIR INVESTMENTS STRATEGICALLY TO PROFIT FROM ANY OUTCOME.
DETAIL
2. BUSINESS CONTINUES TO BOOM, FUELLED BY CONTINUED HIGH GROWTH IN CHINA. HONG KONG INVESTMENTS ARE SPREADING FAR INLAND, ESPECIALLY TO SHANGHAI (WHICH IS EXPECTED TO BE THE MAIN CENTRE FOR MEDIUM-TERM GROWTH). CHINESE MONEY CONTINUES TO POUR INTO HONG KONG AND THE PROPERTY MARKET AND STOCK EXCHANGE REMAIN BUOYANT.
3. THE ROW WITH CHINA ALMOST DISAPPEARED IN DISCUSSIONS WITHIN THE BUSINESS COMMUNITY. THE REASONS FOR THIS ARE COMPLEX. IT IS NOT BECAUSE ANYTHING HAS BEEN RESOLVED BUT THERE IS AN ALMOST UNIVERSAL VIEW THAT THE POLITICIANS AND DIPLOMATS WILL EVENTUALLY COME TO TERMS, THOUGH THE NEXT FEW MONTHS WILL BE STORMY. THERE IS ALSO A BOREDOM FACTOR: THE TOPICS HAVE BEEN ARGUED TO DEATH AND THEY ARE NOT IN THE SCALE OF WORLD EVENTS, TERRIBLY EXCITING.
4. PRIVATE VIEWS CONTINUE TO COVER THE SPECTRUM. MOST CONCERNED ARE THE PROMINENT BRITISH AND HONG KONG HONGS WITH POLITICAL CONNECTIONS AND NEEDING CHINESE FAVOURS (E.G. JARDINE, HONGKONG BANK C AND W). BY CONTRAST, BRITISH INVESTORS IN CHINA SEEM UNCONCERNED VIS-A-VIS THE CHINESE, THOUGH WORRIED ABOUT THE RESOLVE OF THEIR BANKERS AND THEIR BOARD MEMBERS FAR FROM THE
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