TNAG-1172-FCO40-1453-Future-of-Hong-Kong-1982 — Page 98

CONFIDENTIAL

2

4.

Baker asked the Governor for his views. The Governor said that Taiwan was a national issue for the Chinese. No Chinese politician could afford to be anything other than deeply committed to one China, and to achieving progress over unification. Hence the 9-point proposal of last September. It was doubtful whether the Chinese really expected that proposal to lead to anything. But it was essential for them to keep the magnetism the right way; and they got very upset by actions by others which appeared to be pushing in the opposite direction. The advanced aircraft issue was an example. Baker asked whether the decision not to supply advanced fighters and the visits by Bush and himself would help. The Governor thought they would. But the Taiwan problem would not go away. Deng himself had no interest in blowing it up but he had to watch his back. The Senator asked whether it was important for Deng politically to meet the President. The Governor said that Deng would not have raised the question if he had not been serious about it.

Future of Hong Kong

5.

The Governor explained that Hong Kong was stable, prosperous and useful to China, and it was in the interests of all concerned, including the Chinese, that it should remain so. The 1997 problem was being approached in a step by step way. In 1979 Deng had asked Murray MacLehose to pass on the assurance that investors should set their hearts at ease. This had a good effect at the time but the move into the 1980s had inevitably focussed attention on the approach of the end of the lease. Deng had repeated his assurance to Lord Carrington in April 1981 and the latter had explained the technical/legal problems associated with 1997. The next step had been Mr. Atkins' visit to Peking in January this year. The Chinese had then accepted that there was a problem which would have to be dealt with sooner rather than later and had said that they were beginning to study it, and that there would have to be discussion. They had made it clear that they attached great importance to Hong Kong's status as a free port and as a commercial and financial centre. They had also said that they would consult "the various circles" in Hong Kong, and there had recently been a procession of people going to Peking to be sounded out about their views. The next stage would be the Prime Minister's visit to Peking in September. It was very unlikely that an agreement would be signed and sealed during that visit, but there would be intense interest here and another step forward would be needed. The Governor added that the issue was a difficult one for the Chinese and it was important not to rush them. The common objective was to preserve the confidence which sustained the prosperity of Hong Kong.

CONFIDENTIAL

16.