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DSR 11C
b)
a legal system which gives confidence to "investors, i.e.
at present, a non-Chinese legal system; and
c) access to world markets based, at present, on inter-
national agreements to which Hong Kong is a party as a
British dependency.
The currency and legal points might possibly be covered
without British administration but the benefits of British
dependency status could not. In any case, until Chinese
policy had been seen to be consistent and stable over a
considerable period investors would have no faith that any
of these conditions would be met under Chinese rule.
8.
A solution to the Crown land leases problem might in
the short term boost confidence in Hong Kong's future, but
it will be insufficient as a confidence-builder unless it
happens soon. Although business confidence is reasonably
high at present, it is brittle, and already under pressure,
largely as a result of world economic uncertainty. In
addition there are other, non-commercial political causes
of strain (eg worry over nationality status). Without
clear evidence of Chinese acquiescence in continuing British
administration after 1997, dis investment will start probably
by 1985 and possibly at any time from 1982 onwards.
9.
An obvious slide in confidence and in particular a
collapse of the Hong Kong dollar, might shock the Chinese
leadership sufficiently to make them ready to discuss
practical ways of bolstering confidence (although we have
to accept the possibility that they might be prepared to
lose most or even all of their present economic advantages
from the territory if they found the question politically
too hot to handle). Alternatively, but much less probably,
the Chinese may over the next two or three years, be ready
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