CONFIDENTIAL
006722 MDHIAN 8377
FEELING THEIR WAY FORWARD ON THESE ISSUES WHICH WILL CONSTITUTE THE MAIN POLITICAL DEBATE FOR THE EARLY MONTHS OF 1994.
9.
IN THIS DEBATE, THE CPG'S ATTEMPT TO SET UP A 'SECOND STOVE' THROUGH THE PWC SEEMS BARELY RELEVANT. POLLING EVIDENCE SHOWS THE COMMUNITY TO BE UNCONCERNED ABOUT THE PWC'S ACTIVITIES. IN PART, THIS ATTITUDE REFLECTS THE PUBLIC'S RESPECT FOR LEGCO'S ROLE IN THE LEGISLATIVE PROCESS. IN ADDITION, THE PWC IS NOT SEEN AS ABLE TO OFFER CREDIBLE POLITICAL OR ADMINISTRATIVE COMPETITION TO HKG.
ECONOMIC REALISM.
10. THE ECONOMY REMAINS THE BIGGEST SOURCE OF REASSURANCE FOR THE PUBLIC AT LARGE. THE ECONOMIC RESULTS FOR 1993 SPEAK FOR THEMSELVES. REAL GROWTH IN GDP IS ESTIMATED TO HAVE BEEN AT LEAST 5 PERCENT, FOR THE SECOND YEAR IN SUCCESSION. UNEMPLOYMENT IS AT 2 PERCENT, AND INFLATION HAS CONTINUED TO RETREAT ENCOURAGINGLY (DOWN TO 8.5 PERCENT FOR THE FIRST ELEVEN MONTHS OF 1993). THE BUDGET WHICH THE FINANCIAL SECRETARY WILL PRESENT IN MARCH IS EXPECTED TO SHOW OUR PUBLIC FINANCES TO BE IN THE EXCELLENT SHAPE.
11.
DESPITE AN EXCELLENT ECONOMIC PERFORMANCE BY ANY STANDARDS DURING 1993, THE COMMUNITY IS BY NO MEANS COMPLACENT ABOUT THE PROSPECTS FOR 1994, ACCORDING TO A VARIETY OF OPINION POLLS. THERE REMAINS A LURKING SUSPICION THAT THE 'CHINA FACTOR' COULD TURN AGAINST THE TERRITORY. HERE, THE BIGGEST CAUSE FOR CONCERN IS STILL THE RENEWAL OF THE PRC'S MFN STATUS. THE CPG'S DECEMBER PUBLICATION OF A DRAFT EUGENICS LAW WILL NOT ASSIST THE LOBBYING PROCESS. CRITICS OF ITS HUMAN RIGHTS RECORD DRAW INEVITABLE PARALLELS WITH NAZI GERMANY AND DENOUNCE THE DENIAL OF BASIC RIGHTS NOT ONLY TO POLITICAL DISSIDENTS AND RELIGIOUS ADHERENTS BUT, HENCEFORTH, TO THE MENTALLY AND PHYSICALLY DISADVANTAGED. NEVERTHELESS, THE GENERAL CONSENSUS IN THE BUSINESS WORLD IS THAT MFN WILL BE RENEWED.
PRC DOMESTIC PROBLEMS.
12.
MORE ANXIETY IS LIKELY TO BE GENERATED BY THE LATEST DEVELOPMENTS WITHIN THE DOMESTIC PRC ECONOMY. THERE WAS A WIDESPREAD TENDENCY TO ACCEPT AT FACE VALUE CPG CLAIMS OF SUCCESS FOR ITS ATTEMPTS TO REIN IN THE SPIRALLING MONEY SUPPLY AND CHECK URBAN INFLATION DURING THE SECOND HALF OF 1993. THUS, THE REVELATION IN DECEMBER THAT INFLATION IN THE MAJOR CITIES IS RUNNING AT 20 PERCENT CAME AS A SURPRISE. THE ANNOUNCEMENT OF
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