SECRET
confidence not grasped. Investors need effective
guarantees against Chinese interference. This at present provided by British administration.
(vii) Central issue is to devise package, inspiring confidence. Given agreed common aim, confident this
possible.
190
(viii) Meanwhile important nothing said or done to damage confidence. This, very fragile...
(ix) Contrary to apparent Chinese beliefs, British Government obtains from Hong Kong revenue only of normal
trading partner.
Sovereignty
3
1.
(x) Chinese and British positions well-known. fully realise importance of sovereignty to China. not inflexible. Willing to consider any solution
acceptable to Britain, China and Hong Kong.
Confidence in Hong Kong
We
We are
(xi) Underlying state of Hong Kong's economy generally healthy. Cumulative effect of Chinese propaganda
campaign is main reason for decline of Hong Kong dollar
and of stock market. There is lack of confidence in
China's SAR plan for Hong Kong. Recent measures taken by Hong Kong Government have helped to stabilise the dollar. But limited scope for intervention.
Background [Not for Usel
2. The Prime Minister is aware of the background.
3. The French have so far shown no particular interest in the future of Hong Kong and we do not keep them regularly abreast of developments. On the Prime Minister's authority we keep only the Americans fully in the picture and, to a
slightly lesser extent, the Australians, Canadians and New
Zealanders.
Foreign and Commonwealth Office
12 October 1983
SECRET