TNAG-0944-FCO40-1163-Future-of-Hong-Kong-1980 — Page 51

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BACKGROUND NOTE ON CONFIDENCE

IN THE HONG KONG ECONOMY

ANNEX A

a)

Long-term Problem

This consists of when and how the administration

of Hong Kong will be changed and in what ways. The

solution adopted could have a profound effect on

investment and confidence in Hong Kong and thus

in Hong Kong's future role. Though concern about

the future already exists in Hong Kong it is not

yet an urgent problem, the assurances about

investment given by Deng Xiaoping have helped,

Hong Kong's prosperity remains high, and though it

is not too soon to think about a solution nothing

definite is necessary at present.

b)

Short-term Problem

This consists of how to gain time for (a) by

avoiding situations that precipitate prematurely

a crisis of confidence about the long-term future

of Hong Kong. Examples are: -

(i) Individual leases in the New Territories

issued by the Hong Kong Government (all

of which expire in June 1997) become too

short to be economic, with resultant

slump in investment in real estate and

industry.

The critical date will be 1982

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/ since