CONFIDENTIAL
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IL
HONG KONG STOCK MARKET (HANG SENG) INDEX
6. Aware that Hong Kong stock exchange index has fallen recently.
High interest rates and world recession partly to blame. But
speculation about the future, some of it based on reports of
Chinese views, no doubt responsible.
But we accept that we shall
have to work very hard to ensure that confidence is not seriously
damaged by fears of a major change in way Hong Kong is run.
DR OWEN'S SPEECH
7. Hope you will bear the above in mind. Most important for
all concerned, but particularly for Hong Kong, that confidence
is maintained. Any reassurance you can offer - while not raising too
high expectations for Prime Minister's visit
would be welcome.
Could I also ask you to avoid too precise discussion about the
actual nature of any settlement which, from someone in your
position, might be taken as reflecting HMG's line?
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The problem
here is that this might provoke the Chinese into public counter-
statements which might limit their own flexibility on subsequent
negotiations. Particularly important to avoid making them feel
that they must counter the idea of continuing British administration.
8. Here are notes on which you may like to draw, together with
some factual background material.
(Defensive only)
9. Sovereignty.
Obviously wrong to consider any concession on
sovereignty without very clear undertakings on continuing British
control. Would need very careful consideration.
CONFIDENTIAL