TNAG-1169-FCO40-1449-Future-of-Hong-Kong-1982 — Page 100

布政司署

港下亞畢道

本署檔號 OUR REF.:

來函檔號 YOUr Ref.:

Х

SECRET

162A

GOVERNMENT SECRETARIAT

LOWER ALBERT ROAD

HONG KONG

29 March 1982

R D Clift Esq

Hong Kong & General Dept F CO

ник охо #PARAGUST 72

་་་

Tar

Dear trick,

of

076/4 P714

FUTURE OF HONG KONG:

FINANCIAL IMPLICATIONS

129

see 188

Thank you for your teleletter of 16 March about the Planning Staff's suggestion that "some form of financial contingency planning", perhaps including the establishment of a central bank, might help avert or slow down a slide in confidence. Since Christopher Mallaby was only here for the afternoon of Sunday, 21 March, I did not arrange for him to see the Financial Secretary. But I consulted the Governor and John Bremridge before- hand on the line to take.

2.

Your account of their thinking suggests that the Planning Staff have failed to understand the nature of te problem. The essential point is that a slide in

nfidence brought about by Chinese unwillingness to take on acquiesce in action over 1997 would be a political problem, though its most immediate effects would be economic and financial. It would therefore require a political solution ie some action agreed with the Chinese sufficient to halt the slide. The further the slide and the process of disinvestment had gone the more positive the action would have to be. Intervention in the money markets or similar action here could have a rallying effect but without some bankable assurances from Peking it could only be temporary. There is thus no parallel

with earlier financial crises here.

192

Mr.

McQu434).

3113

3.

Mr Mario of 4 I am domphing.

We had already

made X & the Pl. Shaff I old reply explain that we were in the middle

If a debate with them & that it seemed norful for Me Mallaby

1⁄2 discuss with

HKC Dm pl.

Be 3.13