TNAG-1168-FCO40-1448-Future-of-Hong-Kong-1982 — Page 120

CONFIDENTIAL

Miele ayoll

92A

A E Donald Esq CMG

Assistant Under-Secretary

Foreign & Commonwealth Office LONDON SW 1

iof. Par 2013

BRITISH EMBASSY,

PEKING.

1 March 1982

Dear Alan

ERIC HOTUNG: FUTURE OF HONG KONG

1.

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In my earlier letter of today's date I covered my conversation about Taiwan with Eric Hotung over lunch on 27 February. He had also had some discussion of Hong Kong with Liao Chengzhi.

2. Hotung said that Hong Kong was not seen by the Chinese as a top priority problem. Taiwan was foremost in their minds. Nor did they understand the concept of business confidence in Hong Kong. When he had expressed to Liao his concern for the future, Liao had replied "Don't Liao appeared worry, your property will be all right".

Hotung

to believe that such assurances should be enough. had tried to get across the message that his property tnere would be almost worthless ir proper arrangements were not made to ensure Hong Kong's continued prosperity.

3.

notung thought that the Chinese were attempting to snow that they could do without Hong Kong - in the special economic zones and by the decision not to use Hong Kong as a rear support base for oil exploitation in the South China Seá. It would be difficult to disabuse them of this idea, and the failure of their efforts might not become apparent to them until it was too late to reverse a slide of confidence in Hong Kong (i.e. by 1985/6).

He

4. In a word, Hotung was gloomy about the future. also painted a rather alarming picture of social unrest in Hong Kong - a widening gulf between haves and have-nots and a soaring crime rate. He described the internal situation as explosive. I found this at the least exaggerated, though it is not my field. But I would not argue with his view that continuing uncertainty about the future would aggravate social problems.

CONFIDENTIAL

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