Mr Donald
HKK 0901
RECETA ALE
27 JUL 1981
CONFIDENTIAL
INCLA
ااااا
Sir Honde
Enter & pa.
4
-31781
820/2 27/7
62
HONG KONG AND SHENZHEN SPECIAL ZONE
1. Sir Philip Haddon-Cave told me this morning that he had heard
from Hong Kong that the Stock Market was full of rumours that the
Chinese authorities were due to announce a new arrangement for the
Shenzhen Special Zone on the following lines:
a) a boundary would be created to the north of the Zone with controls
for entry and exit into the rest of China;
b)
there would be free movement for people between Shenzhen and Hong
Kong;
c)
d)
2.
a separate currency linked to the Hong Kong Dollar would be used
in the Zone;
investors would be allowed to buy 'leases' of land in the Zone
for 50 years.
Sir Philip and I agreed that some of these points were not new. There
has been a good deal of speculation for some time about free movement.
The currency point I have not heard before.
Apparently the Stock Market
attaches most importance to the point about 50 year leases, seeing it as
a confidence building measure for Hong Kong. The logical argument would
be that it would be unlikely for the Chinese to allow an island of
capitalism between a Communist China and a Communist Hong Kong. My own
view is that there might possibly be some reassurance in this, but I
do not think it really would allay all fears because the suspicion would
still remain that it was intended simply to create one large special
zone including Hong Kong, and I would have thought investors would have
considerable doubts as to the ability of the Chinese to administer it.
However, it may be a step in the right direction if the rumour is true.
/It
CONFIDENTIAL
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