CONFIDENTIAL
modernisation programme and on ways in which Chinese might be
persuaded to behave responsibly over proliferation issues.
MFN Status for China
Renewal of MFN essential to Hong Kong's economy (70% of China's exports to US pass through Hong Kong). If not renewed, estimate that GDP growth would be halved and substantial job
losses.
Other options, such as partial renewal targeting the Chinese state sector or conditional renewal could also damage Hong
Kong. Would bring uncertainty to the markets and lead to an
erosion of confidence.
- In our view cancellation or conditional renewal of MFN is not
the best means of promoting human rights in China. The MFN weapon targets precisely those who, by their international economic activity, are making reform in China ultimately inevitable. Hope US will explore other options, eg a bilateral
human rights commission. Also aware that China would like US
approval of World Bank lending, and US to lift its 1989 ban on
US Trade Promotion Programme.
CONFIDENTIAL
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