TNAG-0945-FCO40-1164-Future-of-Hong-Kong-1980 — Page 32

Mr Donald

аккона Knter

*U DEC 1980

SECRET

CSK

INDEX

PA

of 12.12

مثل

REGISTRY

FUTURE OF HONG KONG: GENERAL IMPRESSIONS

1.

Sir E.

E. Youde. 5/4/12

224 (157

During my visit to Hong Kong the question of the future came up during several conversations with Unofficials, business leaders, etc. Even more than last February, the readiness to discuss a previously rather taboo subject was very evident. The following are my broad impressions, which must clearly be treated very cautiously:

a)

b)

c)

Business feeling. Most major organisations (banks, and large firms) remain confident and do not see any serious inhibition on investment in the near future. They all agree, however, that within the next few years some clearer indication of the likely future arrangements for Hong Kong, or at any rate more precise assurances than have emerged from Peking so far, will be necessary. Estimates of when confidence would begin to be affected vary. Some attach importance to the 15-year mortgage and 1982 but in many cases 1985, as the middle of the decade, is seen as an important psychological point. Most observers think that major American firms would for the time being continue to take decisions to invest in Hong Kong on a pragmatic view of the political situation, although in some cases they might have to overrule their lawyers and auditors. The only people who were positively suggested to have been put off already were some Japanese investors - this was the view of Mr Brown of the Chartered Bank.

While business confidence is thus still good, there is slightly more tendency for individuals to worry about the future from their own point of view and that of their families. The concern of locally-engaged Administrative Officers is one symptom of this. So is the fact that the point was raised with me at at meeting of the Heung Yee Kuk. In most cases these worries are likely to be expressed in terms of what Britain intends to do hence the interest in the new Nationality legislation. None of this should be exaggerated. The criticism is not widespread and is expressed in a low key. But is is likely to grow.

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The trial of the Gang of Four has made people in Hong Kong more sensitive to the risk that changes in Peking could affect China's attitudes towards Hong Kong. They are still reassured by the statements of Deng Xiaoping and others, but comments on the trial in Hong Kong have pointed up the possibility that

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/Deng's