NOTE TAKEN BY A MEMBER OF THE FORD FOUNDATION
Notes on Premier Li Peng's comments on Hong Kong in the course of a meeting with the participants in the symposium on "Economic Management and Foreign Investment for the Continued Openness and Reform of the Chinese Economy, held on December 12, 1989.
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Lord Barber's question with regard to Hong Kong: In a meeting in May of last year with Deng Xiaoping, he stressed the importance of Hong Kong to China. Indeed, 70 percent of inward investment to China comes via Hong Kong. In May of last year, most sensible people in Hong Kong had confidence in the process of the reversion of Hong Kong to China in 1997. That arrangement was remarkable example of cooperation between governments. June, particularly on June 4, occurred events witnessed on television by hundreds of millions of people, and viewed with particular concern in Hong Kong. I wish to make clear that I am not concerned with the rights or wrongs of what happened. The fact is, justifiably or not, many in Hong Kong were extremely alarmed by what they saw, and now ask themselves whether what they saw could happen in Hong Kong. Many executives and senior administrators have reacted by leaving Hong Kong or preparing to leave. Words and assurances are not enough to convince these people. With all due respect, are there actions which could be taken to increase confidence in Hong Kong? For example, and I offer this only as an example, if China could agree to an increase in direct representation in Hong Kong (translated as "Hong Kong directly selecting representatives"). Not a majority, but if up to 49 percent (translated as "if 49 percent"), were directly elected this could make a difference. Of course, you could ask why Britain didn't do this long ago, but I am now talking about events after June 4.
Don Kendall's comment followed: To give a specific example of part of the problem Lord Barber referred to, Pepsico's Hong Kong office covers the region from South Korea through Malaysia, and our Pizza Hut and Kentucky Fried Chicken affiliates also have regional offices there. We are finding that good people working for us want to leave Hong Kong because of 1997, and any measures you could take to restore confidence would help operations like ours. Our long range plan is to continue to run our regional operations from Hong Kong, so this problem is of particular
concern.
Li Peng's response to the Hong Kong issue came in two parts.
Early in his talk, he commented: to please his British friend he wouldn't go into the merits of what happened on June 4. But from an historical perspective the actions will be assessed positively because they maintained stability and prevented turmoil, thus guaranteeing progress in China. As to political reform, that will be carried out according to Chinese conditions. China has a National People's Congress which will continue to assure this, and the Political Consultative Conference will play a positive role.