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important point was the significance of "several no changes" Li explained that Chinese policy towards Taiwan was to demand a change in the national title used and in the flag. Apart from this they were not asking for any other changes. The administration, economic system and even defence forces would continue as before. So, Wang added, would right to property. Li said there would have to be acknowledgement that Taiwan was under the jurisdiction of China but, in that context, the loca: government could continue. When pressed by the Governor on how this parallel applied to Hong Kong, Li said it was essentially a general illustration. There were differences between the Taiwan and Hong Kong situations. When asked about Taiwan, Chinese leaders could say that they had allowed Hong Kong to continue without any changes.
5.
The Governor said that Deng's assurances were good. They were accepted in Hong Kong and elsewhere.. But they related to an unspecified time in the distant future. The problem was how to make sure that Hong Kong got through to the time at which Deng's assurances to investors would be realised. Because of British law the year 1997 cast a shadow well before that date. This was not yet having an effect, but it might within two years and certainly within five. What did the FS think?
6.
The FS said that it was difficult to be precise about such a matter. One could certainly say that there would be some effect on investment within two years. One possibility was that this would take the form of investors in Hong Kong failing to maintain long-term assets or invest in new long-term assets. This might happen before a drop in new investment from outside since such new investment could, after all, be short term. Another possibility was that some event would trigger a sudden loss of confidence and disinvestment. The CS commented that this could happen very suddenly.
7.
In answer to a comment by Wang that we must hope such things did not occur, the Governor said that more than hope was needed. It was not a question of persuading people like himself who were quite prepared to accept what Deng had said and to hope. The problem was convincing accountants and lawyers elsewhere. As an example, he recounted his meeting with the Board of the Exxon Company in New York about Castle Peak B. This was a very large investment. The Exxon Board had said that their accountants told them the investment made no sense since its amortisation period coincided almost exactly with, or came just after, the length of land lease for the site on which the power station was to be built. The company had eventually decided to invest - against their accountants' advice, but it had been a near thing. Had Exxon on this occasion decided not to invest, and had this become known, it might have precipitated precisely the sort of sudden crisis of confidence which the FS had mentioned. There could be no question of such an investment by an international firm in five years time and perhaps in two.
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