TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 104

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17. That the PRC have so far refrained from taking over

Hong Kong, despite their material strength and nationalist

principles, is largely because of the economic benefits they

derive from the territory. They obtain 35% to 40% of

their foreign exchange from Hong Kong, largely from their

exports to Hong Kong and the activities and investments

of PRC banks and trading organisations there.

They also

derive substantial economic advantage from investments by

Hong Kong businessmen in China, from the managerial,

financial and technological expertise and example readily

available in the territory, and from the port and airport.

For these reasons they clearly want Hong Kong to be

maintained as a prosperous, stable economic entity serving

Chinese purposes. They accept that it should remain

capitalist in character but it is not clear how far they

can admit that the confidence of investors and entrepreneurs,

which is the essential determinant of prosperity and stability,

depends on continued British administration.

Time Factor

18.

Confidence in and outside Hong Kong is already

beginning to be affected. There is a degree of nervousness

reflected in the Hong Kong Stock Market which is partly due

to uncertainty over the future. Without an announcement of

positive progress in the near future, local and international

investment (most is generated internally) will almost

certainly cease and move elsewhere. No-one can forecast

/with

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