TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 33

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SECRET

FUTURE OF HONG KONG : PRC'S VIEWS ON THE CAPITALIST STRUCTURE

OF HONG KONG

1.

The Prime Minister has asked what evidence there is that

the Chinese are 'acutely aware' of the need to preserve the

capitalist structure of Hong Kong. There is no doubt of the Chinese understanding of their benefits from Hong Kong. Though

these are generally expressed as a contribution to the 'four

modernisations', the importance of China's foreign exchange

earnings is clear. They have emphasised the need for a separate

currency for Hong Kong.

2.

There have been reports from many different levels in

China that even with a change of sovereignty over Hong Kong,

China envisages its

continuation as a free port and an inter-

national trade and financial centre as stated to Mr Humphrey Atkins

in January 1982 and to Mr Heath in April. Further reports

have said that private property and investment would be protected

and there would be no change in the present life-style of the

people.

3.

On the specific question of capitalism, Deng Hsiaoping

told the Governor of Hong Kong on 29 March 1979 that:

'The

Chinese position would not affect the interests of investors.

To put it more clearly . . . Hong Kong would be continuing with

a capitalist system while China was continuing with a socialist

system. By 1997 China might take over Hong Kong. But this would

not affect her economy.

SECRET

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