TNAG-1169-FCO40-1449-Future-of-Hong-Kong-1982 — Page 138

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Vice-Minister Zhang replied that it was not only developments in Poland itself which held the Soviet Union back from military intervention, but also the situation in Afghanistan. Soviet troops would not easily be withdrawn from Afghanistan, but Mr Zhang agreed with Lord Rhodes' view that the situation there was an embarrassment for the Russians. Vice-Minister Zhang believed that it was essential to continue to support the Afghanistan people and not to be misled by the double Soviet tactic of on the one hand using their own troops or proxies to intervene, and on the other in using rhetoric about peace and detente which were mere empty words.

9. Lord Rhodes then raised the question of COCOM prohibition on the export of strategic materials to China. Lord Rhodes thought it was foolish to continue to treat China like members of the Eastern bloc. Vice Minister Zhang said that he appreciated Lord Rhodes' view, but thought it was up to the West to do something about it. Lord Rhodes said he had learned of several new examples of how the COCOM rules operated to prevent manufacturers from exporting civil. technology to China and would begin a campaign to have these rules changed as soon as he returned home. Vice-Minister Zhang issued instructions to PIFA to collect information from the Departments concerned to supply to Lord Rhodes.

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Lord Rhodes went on that he would like to raise a difficulty and serious question to wit the problem of Hong Kong. Hong Kong was at present prosperous and probably made a contribution of some 40% to China trade. China derived many advantages from Hong Kong. Lord Rhodes wondered how Hong Kong would fit into an economy like that of China. Many people said that things would be all right. However, the next two years would be most important because many practical questions like leases and rents had to be tested in this period. Many years ago, Lord Rhodes commented, Shanghai was making sophisticated products which were in demand throughout the world. Lord Rhodes wondered how Hong Kong would fare (this reference to Shanghai and the implication for Hong Kong was missed by the Chinese interpreter).

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