TNAG-0529-FCO40-624-Future-of-Hong-Kong-1976 — Page 25

CONFIDENTIAL

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6.

(c)

(a)

He

listing the dangers of any permanent trade representation and visiting Russian vessels. also spoke along expected lines about the need to prevent the KMT engaging in subversive activities here;

Li

that the Portuguese did not give up Macau. apparently made an analogous reference to the 70- year occupation of Portugal by Spain, during the whole of which period the Portuguese flag never ceased to fly in Macau. The inference was presumably that political events within Portugal (e.g. acceptance of a pro-Soviet communist line) need not be decisive in determining the relationship between Macau and China;

that Britain continued to want to keep Hong Kong. Li apparently was arguing that it was unlikely that Britain would decide to give up Hong Kong since he believed Hong Kong to be more valuable to Britain than it was to China.

Stanley HO was speaking in categoric terms, but those who know him say that he is always inclined to put a gloss on things. For example, in dealing with the factor in (b) above, he referred in approving terms to the present Governor, and how important it was to maintain policies broadly along the lines of the present Governor's. HO's gloss on the reference to the 70-year occupation of Portugal by Spain was that a local Portuguese boy could declare himself Governor of Macau!

7.

One other point of some interest is that when questioned by the businessmen at the Fok dinner party, LI Chu- sheng said that even though China did not recognise the treaties between Britain and China, she would have regard to the date 1997. When it arrived, it was not certain that China would wish to regain control of Hong Kong immediately. Much would depend upon the precise situation obtaining at that time, but if China did decide to recover Hong Kong, it would be by negotiation with the British Government. Li was asked if there was any difference between the New Territories and the remainder of Hong Kong and he replied that Hong Kong would obviously not be viable without the New Territories and that the British would consequently be unlikely to negotiate a separate settlement for only part of the territory. Li also said that there was a further difference which had to be taken into account by investors. The Chinese Government would take into account the differing lease terms which had been issued by the British in Hong Kong.

8.

There may not be very much that is new in the above but it is of some significance that the local communists are giving these reassurances to local businessmen about the safety of their present and projected investments. The report also

/contd..

CONFIDENTIAI