SECRET
R RIDLEY'S MEETING WITH THE GOVERNOR OF HONG KONG: 22 JUNE 1981
ESSENTIAL FACTS
THE FUTURE OF HONG KONG
1.
Lord Carrington outlined problem of confidence in Hong Kong
to Vice-Chairman Deng Xiaoping in April 1981. Deng reiterated,
but did not expand on, the assurances made to the Governor in 1979.
He made it clear that China had no more to say at present on her
intentions over Hong Kong.
2.
HM Ambassador in Peking subsequently covered this ground again
with Ke Hua (Ambassador in London) at the latter's request. If
discussions are followed up this may contribute to Chinese under-
standing of problem. But no indication that leadership yet ready
to tackle the issue in more concrete form. Meanwhile, 'the 1997
problem' is attracting more concern in Hong Kong. There was some
disappointment that more did not come out of the Secretary of State's
visit to Peking and although confidence has since recovered
(especially on the stock market) we have to be prepared for a
possible slide (leading even to a run on the Hong Kong dollar).
A contingency paper is therefore being prepared to cover possible
action in such an event of a slide of confidence. This is now in
hand there are no major points of difference on this between
the department, the Governor and Peking.
3. The Governor is likely to ask that the visit of the Prime
Minister to China, now projected for 1982, be put back as far as
possible to give the Chinese plenty of time to consider the
problem. Firm dates have not been made for the visit but the
only substantial available slot looks like being from 11-29 September
(she might also go to Japan as well as China and Hong Kong).
SECRET
/HONGKONG AND SHANGHAI BANK