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3. David Laux, from the NSC, whom Alan Donald may recall having met last November, said Peking had only recently focussed on the problems. One could not expect them to understand a capitalist system perfectly, but one had presumed enough pragmatism on their part to enable something to be worked out. Developments since last September had not been very encouraging, and the problem seemed to have become a matter of controversy within the Chinese Party bureaucracy. But the vibrant influence of Hong Kong upon the hinterland was such that the Chinese themselves might see problems in integrating Hong Kong, and be encouraged to make separate arrangements. He thought that oil development in the South China Sea, which was due to begin next year, would have a beneficial effect. Peking had been pressuring the US companies to establish their bases on the mainland, but he thought they would decide to use Hong Kong, and that this would help the economy and land values in the territory.
4. At this point Dr Yung Wei, who was an academic at an American University before returning to join the Taiwanese equivalent of the Cabinet Office, laid out the Taiwanese position in rather polemical terms. Taiwan was Chinese territory already recovered by the national effort from the Japanese; Hong Kong was a colony taken away from China during the infamous opium war. Hong Kong should therefore be returned to China, but after China had become free. No mainland leader would put his neck in the noose by prolonging the lease. He doubted China would ever negotiate a solution, and thought the present phase was purely tactical manoeuvering by the PRC to try to establish a link between Hong Kong, Macao and Taiwan. He denied a sugestion that the Taiwanese Free Zone was an attempt to lure capital away from Hong Kong. Taiwan had all the capital she needed, and was interested primarily in know-how and high technology. He made some disparaging remarks about property sales by the Hong Kong Government and denial of British citizenship to people of Hong Kong. Later, he softened his line to describing Hong Kong as a "breathing point" for China, a model of what Chinese people could achieve, and said that what was required meanwhile was a neutral government.
5. A number of businessmen intervened, and made it clear from their questions that they doubted the wisdom of investing in Hong Kong during current uncertainties, while similar advantages were available in Singapore and Taiwan.
Stressing
6. I was asked to comment on what others had said. I was speaking in an entirely personal capacity, I said one had to consider where we had started from. There was nothing new about the Chinese position on sovereignty. Uncertainty about the future had made it necessary to grasp the nettle, and we had succeeded over a series of years in extracting progressively more helpful
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