TNAG-1169-FCO40-1449-Future-of-Hong-Kong-1982 — Page 104

R D Clift Esq

Mick okol!

HKGD

AL

FCO

A

CONFIDENTIAL

British Embassy PEKING

29 March 1982

6/4

Mr. Morris o/v

Intivesky 31/3

161A

See (192

See (170

Seel

Dear Dick

DISINVESTMENT FROM HONG KONG

1.

We were most interested to receive from FED a copy of an article from the "Economic News" of 10 March 1982 about Taiwanese designs on the money they think will be leaving Hong Kong because of uncertainty over the lease. (I enclose a copy of that article for your ease of reference.)

2. I am not in a good position to comment on the Taiwanese estimate of the size of the expected disinvestment, though US$ 20 billion seems very high, but their belief that the money will flow within the next three years seems sound enough. Indeed Mr Bremridge told us when he was here earlier this month that quite large-scale disinvestment had already started, and that only an influx of investments from South East Asian Chinese into Hong Kong had masked it. If and when Malaysian and other money stopped coming into Hong Kong, however, net disinvestment would become apparent.

3. I agree with Hugh Davies' manuscript comment on this article, that the Taiwanese designs might help to concentrate minds in Peking. It will be a point worth making to the Chinese at a suitable opportunity that the Nationalists stand to benefit from disinvestment from Hong Kong.

Yours ever Muchal

M W Atkinson

cc :

M Elliott Esq FED, FCO

RJT McLaren Esq CMG (PERSONAL)

HONG KONG

CONFIDENTIAL