TNAG-0851-FCO40-1061-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 129

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1645: PROHONGAID LONDON THIRTEEN:

GIS 536/79 (ADD)

THIS IS WHY IT IS ESSENTIAL FOR MRS THATCHER TO BE THINKING OF THE 1997 DEADLINE. FOR WHILE IT MAY NOT EXIST IN CHINESE EYES,

IT IS STILL A VERY VALID AND REAL WORRY IN HONGKONG AND IN THE MINDS OF INVESTORS WHO COULD DO MUCH TO PUSH THE DEVELOPMENT OF THE COLONY IN THE YEARS AHEAD.

THIS IS ONE ISSUE IN WHICH BRITAIN HAS TO TAKE THE LEAD. IF IT DOES NOT COME FROM A CONSERVATIVE PRIME MINISTER WHO HAS A

RAPPORT WITH THE CHINESE LEADERSHIP, IT IS NOT LIKELY TO COME AT ALL. INFORMS HONGKONG==REUTERS

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: PROHONGAID LONDON

ADD TO GIS536/79

YCX069 26-1313 YHE 524

WHEN THE GOVERNOR OF HONGKONG, SIR MURRAY MACLEHOSE, VISITED PEKING EARLIER THIS YEAR, AND THE MODALITIES OF STEMMING THE FLOOD OF 30TH LEGALS AND ILLEGALS WAS DISCUSSED, ONE SENIOR CHINESE OFFICIAL COMMENTED THAT THE PROBLEM WOULD NOT BE SOLVED UNTIL THE GAP BETWEEN THE STANDARD OF LIVING IN CHINA AND IN HONGKONG HAD BEEN NARROWED. IT WAS COMFORTABLY ASSUMED AT THE TIME THAT THE OFFICIAL WAS REFERRING TO THE STATED AIM OF CHINA TO RAISE ITS PEOPLE'S STANDARD OF LIVING. YOU MIGHT PERHAPS BEAR IN MIND THE POSSIBILITY THAT ANOTHER METHOD OF NARROWING THE GAP WOULD BE FOR CHINA TO LET HONGKONG HAVE ANOTHER HALF MILLION OR SO PEOPLE WHO WOULD PROVIDE CHEAP FODDER FOR ITS FACTORIES (IN ADDITION TO THE 70 000-PLUS REFUGEES THIS OVERCROWDED COMMUNITY HAS RECEIVED FROM VIETNAM). THIS EXODUS WOULD AT ONCE DESTROY HONGKONG'S HOPES FOR ACHIEVING TOLERABLY CIVILISED LEVELS OF HOUSING, EDUCATION AND SOCIAL WELFARE BUT BRING JOY TO THE HEARTS OF LOCAL MYOPIC INDUSTRIALISTS WHO CLAIM THAT HONGKONG'S SUCCESS IN INCREASING REAL WAGES YEAR AFTER YEAR IS ERODING THEIR COMPETITIVENESS IN WORLD MARKETS, AND WHO WOULD PREFER NOT TO MEET THE CHALLENGE OF MOVING INTO LESS LABOUR-INTENSIVE INDUSTRIES WHICH REQUIRE LARGER CAPITAL EXPENDITURES. MORE=

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