TNAG-1039-FCO40-1289-Future-of-Hong-Kong-1981 — Page 81

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Sir Edward Youde KCMG MBE

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Lecas Teddy,

FUTURE OF HONG KONG:

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BRITISH EMBASSY,

PEKING.

RG 17 June 1981

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AUSTRALIAN AND CANADIAN CONCERN

1. A Mr Ian Forter from the Australian Commission in Hong Kong called in at this Embassy recently and in discussion with Bob Peirce,

the Hong Kong desk officer, raised the question of the future of the Territory. He said that concern about the future was growing in the Australian Government, as Australia had a considerable stake-trade, investment and other interests - in Hong Kong. The Australian Government had therefore decided to mention their concern to the Chinese when a suitable opportunity arose, and their hope that the Chinese and British Governments would be able to settle the question in good time. They had not yet decided exactly when this should be done, since there was no suitable visitor coming to Peking in the near future.

2. I have heard nothing of this from Hugh Dunn, my Australian But I think such a move colleague, currently away from Feking. would probably do no harm, and might even help show the Chinese that concern over the future is not simply a British neurosis. I think this is so despite the likelihood that the Chinese will

The Australians are suspect we have put them up to it. apparently well aware of this and realise that their approach must be handled carefully.

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3. Evidence of Canadian concern has also come our way from a source who was acting without authority and must be protected. One of my staff was shown a copy of a report on the future of Hong Kong by Mr Warden, the outgoing Canadian Commissioner in Hong Kong. Warden began his report by saying that he was now more pessimistic about the future than he had been when he arrived in Hong Kong four years ago. Debate about the future had suddenly become more serious and the press reflected a widespread concern. Warden said that his pessimism was not shared by most expatriates in Hong Kong. However, expatriates were renowned for their "short sight am lack of imagination". The signs of uncertainty about the future were manifest. cited a number of examples of Hong Kong investors shifting

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