TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 189

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BRIEF LPS

Mos ĕ Lo KppoF THE

RECEIVED IN REGISTRY NO.

INC

2 1OCTIA CONFIDENTIAL

-3-

(Actit 1

21960

on 19lio.

19/10.

Hong Kong hostile to any suggestion of repetition of these

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cutbacks. Governor and senior Hong Kong officials have discussed

with UK Ministers and officials. Discussions with partners on EC

mandate are now in progress. HMG consider that Hong Kong's

position as a market without quota/or customs restrictions should

be taken into account.

9.

(NOT FOR DISCLOSURE)

Ministers have endorsed DOT view

that, while trying to keep Hong Kong down to very low or even nil

growth rates on present quotas, UK should resist pressure within

EC to impose further cutbacks on the Territory. Present indications

are that this would in the last resort be acceptable to Hong Kong.

FUTURE OF HONG KONG

HKK.040/1

10. Evidence is that Chinese have not yet made up their minds

on long-term future of Hong Kong. For the present, the status quo

suits them well: Hong Kong is a valuable source of foreign

Chinese leaders have

exchange and of expertise and technology.

stated that there would in any event be no early change in Hong

Kong's capitalist system, Vice-Chairman Deng Xiaoping has given

specific assurance, lately renewed to Lord Carrington in Peking,

that investors in Hong Kong should ''put their hearts at ease''

Lord Kadoorie is particularly interested in the development of

'crossborder' economic cooperatives (eg the Guangdong Nuclear

Project) in order to boost confidence in Hong Kong.

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Hong Kong and General Department

16 October 1981

CONFIDENTIAL