Ja
CONFIDENTIAL
DSB 11C
of reducing potential
regional stability ·
(e) Hong Kong
13.
Soviet influence and promoting
Hong Kong is regarded by Feking as part of China.
Their public line is that the problem should be settled
in an appropriate way when conditions are ripe. They
have avoided being more specific. The benefits which
China receives from foreign trade and invisible earnings
through Hong Kong (enough to pay for a third of her
imports from non-communist countries) provide a strong
incentive for maintaining the status quo, as the present
leadership has recently made clear. As the expiry in
1997 of the lease on the New Territories of Hong Kong
approaches, it will become increasingly difficult to
maintain business confidence in Hong Kong. Although the
Chinese have hitherto been unwilling to discuss the
future of Hong Kong, they will almost certainly, within
be prepared
the next seven or eight years, (want to offer some sort
of assurances about the future.
(f) Taiwan
14. In contrast to Hong Kong, China Could not at present
China is unlikely to renounce force as
invade Taiwan.
a means of capturing the island, but would not make the
attempt unless she could be confident that the Americans
would not intervene to support Taiwan. As an alternative,
China may hope to arrive at an arrangement with the
/leadership
CONFIDENTLAL
D 107991 400,000 7/76 904 953
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