TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 44

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an over-simplification to say that China does not recognise the Lease.

But the present Chinese Government has stated that Hong Kong as a

whole is Chinese territory, temporarily under British administration,

a situation which must be rectified 'when the time is ripe'.

By far the most

4. The Chinese Government are thus careful to give away nothing on

their legal position. But they have made it clear that they do not

seek an early change in the status of the Territory.

important factor for them is their reliance on Hong Kong for a major

proportion of their foreign exchange earnings; they also made

extensive use of its port facilities and financial and commercial

institutions. They could not at present administer the Territory and

retain these benefits, which depend on Hong Kong remaining outside

the Renminbi currency areas and its access to foreign markets. Even

during the Cultural Revolution, the Chinese 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

Hong Kong is a delicate political issue for the Chinese.

maintenance of colonial rule on Chinese soil is for them a source

of international embarrassment, and there is some evidence of

opposition to it inside China. It is inevitably linked with the

re-integration of Taiwan and possibly other terra irredenta. There

are implications for the Chinese position on other 'unequal' treaties

(especially those with the Soviet Union). They will thus reserve

their position on Hong Kong, while keeping a close watch on stability. They have given generalised assurances to investors and implied that

they foresee no early change in the capitalist system.

In 1979,

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/Deng