TNAG-2913-FCO40-4188-International-support-from-the-USA-regarding-the-future-of-H-1993 — Page 16

CONFIDENTIAL

You know the damage that would be done to Hong Kong if MFN was withdrawn (70,000 job losses, GDP growth halved). More broadly, we do not see this as the way to encourage the economic reformers inside China.

Hope other ways of achieving Administration's objectives on China policy will be considered fully. If Administration does decide to lay down yardsticks for measuring China's progress next year hope they will be achievable, and leave scope for exercise of discretion. Otherwise storing up major difficulties for 1994. Look forward to keeping close touch as your thinking develops.

CONFIDENTIAL

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