CONFIDENTIAL
6 -
It has
10.
Even so, the underlying risks remain. proved very difficult to draw the Chinese into sub- stantive talks except on their terms. There are still financial institutions in Hong Kong which through imprudent and sometimes dubious dealings in property are over exposed and if a major institution were to collapse there is no knowing, given the amount of cross holding, how widely the effects might be felt. The Hong Kong dollar has weakened again. Hong Kong could probably survive these problems as well as any, were it not for the uncertainty over the future of the territory. Anxieties among the population remain deep and very real. The vast majority know that they will have to stay here and face what comes. The rich have already made their dispositions and if a settlement is not reached to their satisfaction they will leave. The dilemma is greatest for the younger and middle aged professionals in industry, commerce, banking, accountancy, the law and medicine who are now essential to the maintenance of Hong Kong's economy and society as it is today. Equally important are those in positions of responsibility in the civil service, the police and other disciplined services. To most of them Hong Kong is their home; and they do not relish becoming exiles abroad. But they will not risk the future of their families. If no settlement is forthcoming to reassure them they too will reluctantly pack their bags and seek their fortune elsewhere for their professional skills make them almost as mobile as the rich.
State of Anglo-Chinese Negotiations
11.
In dealing with the Chinese we shall have to have regard both to the conduct of the talks in Peking and to the Chinese attempts to gain acceptance of their plans by dealing directly with the people of Hong Kong.
/As
CONFIDENTIAL