TNAG-1029-FCO40-1279-Visits-by-FCO-officials-to-Hong-Kong-1981 — Page 33

SECRET

- 2

pointed out, this point is by no means clear cut. My enquiries confirmed

the information obtained by Mr Williamson that for industrial under-

takings in the New Territories the vast majority of mortgages are for a

much shorter period, often as little as 6 years. Moreover there is

impressive new industrial development in the new estates in the New

Territories.)

3.

There is also the non-economic aspect the problem of citizenship

and the status of Hong Kong residents and their children. The Nationality

Bill has focused attention on this and sharpened worries.

4,

Opinions vary widely on the effect on business confidence. Some

leading financiers maintain that there is already a significant out-flow

of investment, particularly to Singapore which is being built up as the

rival to Hong Kong. Others disagree and maintain that the business

confidence problem still remains in the future. The fact, of course,

is that given the lack of foreign exchange control no one can really

be sure of the facts. What is clear is that concern is mounting, the

problem is freely discussed and there is a general belief that 'something

must be done' within two or three years at the latest.

5. No one has any clear ideas as to what action should be taken. Hong

Kong people are prepared to acknowledge the difficulties of the Chinese

Government in expanding on their assurances and recognise that this

situation is likely to continue for some time. In these circumstances,

the attitude tends to be a vague feeling that the British Government

should take some sort of initiative.

/UK/Hong Kong Relations

SECRET