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Chinese Assurances
3. During the Governor of Hong Kong's visit to China in March 1979,
Vice Premier Deng Xiaoping re-affirmed China's consistent position
that sovereignty over Hong Kong lay with China. However, he acknow-
ledged Hong Kong's special status, which he said would be respected,
and asked the Governor to tell investors to "put their hearts at ease".
4. This line was confirmed by Premier Hua Guofeng during his visit to
the United Kingdom in October 1979, and again by Vice Premier Gu Mu
during the visit of Sir Philip Haddon-Cave, the Hong Kong Financial
Secretary, to Peking in May this year. Mr Gu said that the time was
not yet ripe to make a presentation of concrete proposals, but that,
whatever was done to solve the problem, the position of investors
should be guaranteed.
5.
The Short-Term Problem and the Implications of the Guangdong Project
The Chinese are probably not yet ready to discuss the long-term
issue of the ultimate status of Hong Kong. Our more immediate problem,
however, is that of business confidence and of leases in the New
Territories. While the statements made by the Chinese are welcome,
they are in themselves not sufficient to meet the legal and practical
problems outlined in paragraph 2 above. However, concrete signs of
China's interest in Hong Kong's continuing prosperity and readiness
to contemplate the maintenance of present arrangements in some form
after 1997 should help to maintain business confidence in the short-
term.
6.
The Guangdong nuclear power station could be one such sign. The
Chinese appear to envisage an agreement covering a period of 25 years,
during which time the sale of electricity to CLP would be an important
source of foreign exchange. This could encourage Chinese interest in
the maintenance of the status quo in Hong Kong beyond 1997.
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