CONFIDENTIAL
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in May things were already changing. The effect of the world recession was beginning to be felt and investment was slowing down. The effects of the crumbling of land and property prices, highly inflated in the boom years of the late 1970s, were being felt in the financial sector. Hong Kong had survived such economic vagaries of fortune before; but now the question of the future of the territory after 1997 was emerging to complicate the scene.
The Question of the Future
3.
On my arrival on May 20 1982 Sir S Y Chung, the Senior Unofficial Member of the Executive Council, addressed me with the words "Your Excellency will have many preoccupations in the administration of Hong Kong but I hope you, Sir, will agree with me that the first priority must be the question of the future of Hong Kong." This expression of concern was not surprising. The fact that from July 1 1982 onwards the lease of the New Territories would have less than 15 years to run had begun to impress itself on the minds, not only of foreign and domestic investors, but of the population as a whole. During the late spring the Chinese invited to Peking a series of prominent and not so prominent Hong Kong Chinese for "consultations". Through these "consultations" knowledge became widespread of their plan to recover sovereignty in 1997 over the whole of Hong Kong and turn it into a "special administrative region" administered by the Hong Kong Chinese.
4.
The prospect of a visit by the Prime Minister to Peking in September was bound to intensify both interest and expectations and there was an anxious interest in how HMG proposed to take into account the
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CONFIDENTIAL