TNAG-1172-FCO40-1453-Future-of-Hong-Kong-1982 — Page 19

LT MON

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Mr. Chef +

CONFIDENTIAL

Enter

PI Webb Esq

Assistant Political Adviser

Hong Kong

Dear Lite

ERIC HOTUNG: FUTURE OF HONG KONG

British Embassy

PEKING

24 June 1982

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378A

See

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04011

INVEX

16012/2

1. Eric Hotung was in Peking last week, and called in for

a brief chat with the Ambassador on Friday 18 June (you may recall that Hotung was also here in February - Sir Percy Cradock's letter of 1 March to Alan Donald refers). Hotung had seen Liao Chengzhi, Wang Bingnan and Ye Jianying.

92A)

2. Hotung had once again discussed Hong Kong with Liao. He said that, in contrast to his last visit, he now had the impression that the Hong Kong problem was under active study, though Chinese leaders still did not understand what made the place tick. Hotung had told Liao that Hong Kong was a useful "weapon" which the Chinese could use in their endeavour to woo Taiwan back to the motherland. A successful settlement of the Hong Kong question would be invaluable, to the cause of reunification.

3. Hotung said that he had told Liao that one of the pillars of the Taiwan "edifice" in the US, was the substantial US business interest in Taiwan.

1 This, he had argued might be weakened if (a) a settlement were reached over Hong Kong which would produce a new surge of investor confidence, at least some of which might be Taiwan's loss; and (b) if the Chinese could offer inducements to US companies which now invested in Taiwan to invest, as well or instead, in China. According to Hotung, Liao had expressed some interest in these thoughts, and Hotung wanted to be able to give him some statistics on investment by US companies in Taiwan. He asked whether we knew how he might get hold of such information.

14.

CONFIDENTIAL