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DSR 11C
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On the other hand, it is doubtful whether the Hong Kong
population or investors in the Territory would regard anything
less as providing sufficient reassurance.
(Chinese history
in recent years gives little encouragement that a Chinese
administration would provide the economic and political
framework within which Hong Kong thrives.)
Prospects in Hong Kong
7.
Although the Hong Kong economy remains remarkably
buoyant in a period of world recession, it is based on Hong
Kong continuing as a major financial and trading, as well as
industrial centre. There is so far no sign of investors being
put off but there is speculation about the prospects after
1997. A major problem is that Crown land leases in the New
Territories are timed to expire by the end of June 1997.
There is also concern over such questions as citizenship.
There are increasing demands for an agreement between Britain
and China over the future.
8.
A slide in confidence would be disastrous for the
Territory if allowed to continue. On the other hand, it
could also provide the impetus for the Chinese to engage in
substantive discussions (they would stand to lose most in
economic terms). It is nevertheless unlikely that we would
get anything like a final solution to the problem in such
circumstances.
Possible Options
9. The contingency paper outlines a number of options which
might at least provide medium-term reassurance. It is
impossible to forecast what might emerge. Probably the best
prospect would be an undertaking by the Chinese to give some
form of advance notice (say 15 years) of any change in the
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