SECRET
-2-
DSR 11C
•
Kong's economic autonomy.
However, I do not myself
believe that they have yet fully grasped the ways in which confidence could be threatened or maintained. They may
possibig-believe that Hong Kong-can-in-some-way-b
-administered_as_an_autonomous-area-under-a-Peking-umbrella
The emphasis by the Chinese Premier, Zhao Ziyang, on the importance of the Taiwan analogy (Peking Telno 18) is
encouraging in that the Chinese (in their '9-point
proposals' issued in the autumn) clearly recognise that Taiwan would need to be accorded a great deal of economic and political independence. However, it is still-just possible
eonceivable that the Chinese might have in mind a solution
for Hong Kong which excludes continuing British adminis-
tration.
'4. If this is in the minds of the Chinese, they are on
the wrong track. Confidence in the Territory, particularly,
among investors, is likely only to be maintained if
autonomy is guaranteed by the administration continuing
on the same lines, ie through the British.
5. In my view, our own interests point to the need to
keep Hong Kong going on that basis. The option of uni-
lateral withdrawal is not really open to us. From the
most negative viewpoint, a British pull-out would create
enormous problems for us. Our political and economic
interests in the Far East would suffer and we would be
faced with a major demand from Hong Kong people to come to this country.
SECRET
16.