TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 218

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སཌ་ས་་་ | བན་ mAW*:

NOTE FOR THE RECORD

SECRET

1997:

Conversations with Song Zhiguang

At dinner on 26 August Song Zhiguang remarked, out of the blue, that there was less being said now about 1997 (by implication in the Hong Kong press). I replied that these things went in waves. A few months ago the press was writing a great deal on the subject; now there was less. But it was important to realise that concern about 1997 was inevitably growing. I could not say that it was already having an effect on investment decisions. But it would begin to have an effect soon. This was something both sides should be thinking about. We both had an interest in the continuing prosperity of Hong Kong.

2.

He

After a pause Song reverted to the subject. asked if we were thinking about the problem. What ideas did we have? I said that we were, of course, thinking about it. We had already, in 1979, put forward certain ideas. The Chinese had not found them acceptable. Fair enough. But the problem would not go away. There were many possible ways it could be dealt with, but they required that our ideas should be the same.

3.

I then asked Song if the Chinese themselves were thinking about the problem. He replied that they were not, and went on to say that 16 years was a long time ahead. I agreed that 16 years was a long time but added that the effects of 1997 would be felt long before the year itself; indeed quite soon. The most obvious example was the problem we had previously spoken about: individual leases to land in the New Territories. Now a lease was for 16 years. Next year it would be 15, then 14 and progressively fewer. Some time soon would come the point where investors would simply say that they would not invest for the short period then available. Those holding off would probably be involved with the investment we most wanted: high technology. I repeated that this was something both sides should be thinking about. Ways were needed for ensuring that we could give ourselves time, if that was needed, to find the solution to the long-term problem. I asked if, when Song said that the Chinese were not thinking about the problem, this was because they thought 16 years was a long time or because they found the problem too difficult. Song smiled enigmatically but did not respond.

SECRET

/contd....