TNAG-0850-FCO40-1060-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 28

# Treaty

LOUD

7

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of Any wavering over the question of Hong Kong and the status is it's treaty

would weaken China's negdiating position vis-a-vis the Soviet Union and I

have yet to meet any informed observer who would give any kind of odds that

China would take such action. A secondary deterrent would be the propaganda

value to the Soviets (and to a lesser degree, Taiwan ) of any overt change

by China.Statements of the subject have been made in the last couple of years

and by Hong Kong businessmen returning from China, by officials in Peking-operated concerns in Hong Kong, which amount to little more than restating China's

position but adding some such rider as that China is not anxious to deal

with the probles in the immediate fusture. It has been suggested that även

China's views, it would not be inconsistent for them simply to ignore the

blithely,

expiry date and carry on by through into the next century. Perhaps this

is true, but for reasons set out below, this would appear insufficient to

solve Hong Kong's present pressing problem.

The problem for Hong Kong is that the only area for major expansion

lies in the New Territories(including the islands, especially Iantab). The

secondary aspect of this is that the pattern for the development of Hong Kong

industry is inevitably away from its traditional light industrial products

like garments, electronics and toys and towards heavier, more capital-intensive

products. It is axiomatic that the greater the investment, the longer the

term for amortising the loan and already the 1997 cut-off date is inhibiting

the sort of major industrial investments which are needed now to guarantee

and

employment eƒ export earning for the 1980's. worsening the situation is the

fact that the sort of large-scale superstructural investment by Government

that is needed both to provide the facilities (power, transport, a second

airport) and the confidence in the future that inspires smaller entrepreneurs also have the same problems of amortisation. The second airport provides a good

also

example.

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