TNAG-0850-FCO40-1060-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 57

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if the solution we have proposed is not acceptable another

will have to be found. In the meantime, it is, of course,

important to maintain confidentiality about these exchanges.

[If raised] OFFICIAL CHINESE REPRESENTATIVE IN HONG KONG

5. We continue to believe that the time has not yet come

when it would be appropriate to appoint an official Chinese

representative in Hong Kong. Such a move might be mis-

interpreted by the local population and business confidence

would suffer. Our impression is that the present informal

arrangements for Chinese representation are satisfactory.

However, the Hong Kong Government will always be ready to

help find solutions to any practical problems that may arise.

BACKGROUND

HONG KONG/CHINA RELATIONS

6. China has a major interest in the stability and

prosperity of Hong Kong. The territory provides about a third

of Chinese foreign exchange earnings and is an increasingly

important source of investment and expertise. Chinese

organisations are investing heavily in Hong Kong and a growing

number of Hong Kong firms are becoming involved in joint

ventures in China. The present Chinese leadership freely

acknowledge that Hong Kong has an important part to play in the

achievement of their modernisation programme.

7. As a result, the past few years have seen a steady

improvement in Hong Kong/China relations, culminating in the

Governor's official visit to China in March and April this

year, the first since the Communists came to power.

Cooperation at the local level between the Hong Kong Government

and the neighbouring provincial authorities has steadily

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3

/increased,