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think we shall get a

150 Cent from the Governor of

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A E Donald Esq CMG

FCO

Lecar Alam,

EGISTRY Icon Taken

But please

Speaker 136 oly next week.

THE FUTURE OF HONG KONG

1.

My Davis (203)

BRITISH EMBASSY,

PEKING.

9 October 1981

221A

See (222)

224

نام

Astrald Enter © Amendments 14/10

1 paper & Obs on tactical pelo pl.

190)

Thank you for copying to me your letter of 2 September to Murray MacLehose, enclosing.the latest draft of the contingency paper on Hong Kong. I have only two points to make about the paper. I shall deal with these first and then address myself to the matters raised in your letter.

2. My first point is that it should, I think, be mentioned somewhere in that section of the paper entitled "The Chinese View" that there is considerable evidence of ignorance and misunderstanding of the Hong Kong problem among the Chinese, even among those officials who might be expected to be well informed. NCNA are the obvious example. An important element in the difficulties we face in broaching the subject of the future with the Chinese is their apparent inability to comprehend the concept of investor confidence. As a result there may well be a tendency to dismiss our concern as a British neurosis, or suspect it as an attempt to extract political concessions by means of an economic scare.

3.

15/

My second point concerns paragraph 13 of the draft where the role of "intermediaries" is discussed. I have reservations about the use of intermediaries and I am inclined to advise against thinking in such terms. If we employ intermediaries we enter the hall of distorting mirrors. We may have one thrust upon us, but I don't think we should seek one. This is not to say that the role of prominent Hong Kong Chinese businessmen is unimportant. Many of them enjoy excellent access to Chinese leaders; they underst and the arcane concept of investor confidence at least as well as anyone else; and they have better opportunities to discuss with the Chinese the future of Hong Kong than we have. Their main usefulness is that they can demonstrate that concern about the future is not just a British conspiracy, but a genuine concern among all those with interests in Hong Kong. This would be destroyed if the Chinese were given grounds to believe that we were pulling the strings and using these men as messengers. I recommend therefore that the paper should take note of the role leading Hong Kong businessmen can play in educating the Chinese leadership about the Hong Kong problem, but not in acting as "intermediaries" between ourselves and China.

14.

SECRET

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