TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 97

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most important factor for them is their consistent reliance

on Hong Kong for a major proportion of their foreign

exchange earnings from Hong Kong (at present 30-40%); they

also make extensive use of its port facilities and financial

and commercial institutions. They could not at present

administer the Territory and retain these benefits. Even

during the Cultural Revolution, the Central Government did

not want a take-over. Improved relations with Britain in the

1970s have led to a friendly practical relationship with

the Hong Kong Government coinciding with greatly increased

Chinese communist investment in the Territory and closer

economic links with Guangdong Province.

5.

The post-Mao leadership have made clear that for the

present the status quo suits them. In 1979, Deng Xiaoping

asked the Governor of Hong Kong to tell investors that they

should 'put their hearts at ease'. But they have stopped

short of any specific undertaking that British

administration should continue beyond 1997.

Moreover,

Hong Kong is a delicate political issue for them which

could complicate the position of leaders preoccupied with

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