TNAG-0944-FCO40-1163-Future-of-Hong-Kong-1980 — Page 153

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Mr Morrice

Mr Williamson Jus

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HICK ouoll RV ZAD IN REG♫TRY NO. 51. 13 AUG 1980

REGISTRY Action Taken

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AW 13/8

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CALL BY SIR S Y CHUNG (SENIOR CHINESE UNOFFICIAL MEMBER OF THE HONG KONG EXECUTIVE COUNCIL): 31 JULY 1980

Future of Hong Kong and the New Territories

1. Sir S Y Chung led into this subject by way of discussion

of plans for the new airport. He thought that there were strong arguments for considering an airport on the Chinese side of the border, for political reasons. He then went on to enlarge at length on current worries in the Hong Kong business world and among young people about the post-1997 situation. He believed that potential investors in large-scale projects in the New Territories were becoming inhibited and would become more so after 1982 because of the 15-year mortgage problem. While it was true that present Chinese assurances superficially made Hong Kong as good an investment risk as anywhere in the Third World, there was a difference. A man who invested in, say, Indonesia was taking a limited risk in planning to supply the Indonesian market. A large-scale manufacturing investor in Hong Kong tended to look to international markets. Therefore he had more to lose there.

2. Sir S Y Chung saw the present as the best opportunity for HMG to try to get a long-term solution to the 1997 problem out of the Chinese. He realised the difficulties, not least the fact that from the Chinese Government point of view there was no real incentive for them to seek such a solution. But he thought that the opportunities would be less favourable later. Meanwhile, confidence would decline in Hong Kong if nothing were done and eventually the territory would begin to suffer from competition in light industry from developments in Southern Guangdong.

3. He saw the idea of an airport on the Chinese side of the border as an important means of approaching the long-term political question with the Chinese. He realised that there would be a lot of practical problems but he still thought it worthwhile.

4.

Sir S Y Chung also stressed that, apart from commercial people, a considerable number of young people were concerned about 1997 on grounds of career planning, citizenship status of their children, etc.

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