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the small-scale investor in Hongkong and it could be argued that even the longer-term investments begin to pay off after ten years or so. This is certainly true in the private sector, although the government is now getting involved in large public works schemes which have to be amortized over a period bringing them up to the lease. It must also be remembered that there is a double impact of the lease expiry on business confidence. If an investor in a project taking ten years to be profitable is today considering his decision, he needs to know what the business climate is likely to be in the first few years after his investment has been returned, i.e. in the eleventh, twelfth and thirteenth years from now. That will I be when he gets his profit. But that will also be the time when other investors, the next generation of investor, are considering in turn their decisions whether to make similar investments for ten- year projects, and they will be calculating that the lease will ex- pire just as their capital is being returned. It is perhaps unlikely, therefore, that they would go ahead with these investments, and this in turn would affect the business climate ten years before 1997. This line of reasoning might have an inhibiting effect on an increasing number of investors over the next few years.
One should not exaggerate this, because there are probably no more than a dozen or so private investments of this scale that would need to feel secure about the post-1997 situation. But those investments are by definition going to be very very important for Hongkong. One of them will be the big new power station which will have to be built in the 1980s, almost certainly in the New Territories, and almost certainly by a combined investment from, both the power companies, with a very long period of amortiza- tion. As for the government itself, one has only to think of the second airport project which is going to have to come in the 1980s and for which the capacity of the government to raise money might well reflect international private business confidence in the future of Hongkong after 1997.
1 These are the reasons, therefore, for taking a fresh look at the whole question of the future of Hongkong and of investigating seriously and dispassionately what practical measures could be taken by the various parties involved. Hongkong, of course, is a tripartite entity dependent, perhaps in roughly equal parts, upon three quite distinct political constituencies-the People's Republic of China, 'which retains the underlying sovereignty; the United Kingdom, which has the responsibility in international law for
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