CRS-8
of Hong Kong and other contested British territories (e.g. the Falkland
Islands and Gibralter), recognizing, in particular, the legality of the
second convention of Beijing,
which calls for the New Territories
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to revert to China in 1997. Without that land, Hong Kong would appear to
be unviable as a British possession.
Leaders in Hong Kong, meanwhile, have a much greater interest in the
colony's future and have yet to be reassured by pledges of British and
Chinese concern. As a result, there were signs of a serious decline of
confidence in the colony coincident with Prime Minister Thatcher's visit
to China and the publicized Sino-British differences over the status of the
territory. The stock market index dropped about 30 percent in the last four
months of 1982, and the Hong Kong dollar declined about 15 percent in the
same period relative to the U.S. dollar and other major currencies. Property
values in the colony continued to fall so that by late 1982 they were about
30 percent less than their level at the high point of the real estate market
in mid-1981. Press reports speculated about alleged large scale "flight" of
capital from Hong Kong to other economic centers in East Asia; spoke about
wealthy Hong Kong entrepeneurs obtaining exit visas in case rapid escape.
were necessary to safe havens abroad; and reported that these economic
leaders were determined to limit their future exposure in the colony while
increasing investment abroad.
Since the turn of the year, however, analysis has shown that the
decline in Hong Kong's economic fortunes had less to do with continued
over the colony's future status and more to do with other
economic difficulties stemming from an inflated real estate market and
the global recession. Thus, property values were seen as overdue for
nervousness