TNAG-1232-FCO40-1545-Visit-by-Edward-Heath-MP-to-China-and-Hong-Kong--August-Sept-1983 — Page 31

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INFO PRIORITY HONG KONG (PERSONAL FOR GOVERNOR).

MR HEATH'S CALL ON DENG XIAOPING: HONG KONG

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1. MR HEATH RAISED THE QUESTION OF HONG KONG DURING HIS CALL ON

DENG XIAOPING THIS MORNING, RECALLING THAT HE HAD FIRST RAISED IT WITH MAO ZEDONG AND ZHOU ENLAI IN 1977 IN DENG'S PRESENCE. MAO

HAD SAID THAT NOTHING SHOULD HAPPEN BEFORE 1997, AND THEN THE

YOUNGER MEN PRESENT COULD SETTLE THE ISSUE. THERE WERE NOW ONLY

15 YEARS TO GO. WHAT THOUGHT HAD THE VICE-CHAIRMAN GIVEN TO

THE INTERIM PERIOD WHEN INVESTORS WERE WORRIED ABOUT THEIR

INVESTMENTS?

2. DENG FIRST ASKED FOR MR HEATH'S IDEAS. THE LATTER REPLIED THAT

WE SHOULD WORK ON THE PREMISE THAT WE WANTED PEOPLE TO KEEP THEIR

INVESTMENTS IN HONG KONG: IT WAS PARTICULARLY GOOD FOR CHINA THAT

HONG KONG PEOPLE WERE MAKING LARGE INVESTMENTS IN CHINA. IT WAS

NECESSARY TO CONVINCE THE POPULATION THAT THEIR INVESTMENTS WOULD

BE SAFE AFTER 1997, AND THIS REQUIRED HELP FROM THE PRC GOVERNMENT.

3. DENG THEN ASKED WHETHER MR HEATH THOUGHT THAT IT WOULD BE POSSIBLE

TO BASE OURSELVES ON THE SPIRIT OF THE NINE POINT PROPOSALS FOR

TAIWAN, AS APPLIED TO HONG KONG. THIS WOULD MEAN THAT SOVEREIGNTY OVER HONG KONG WOULD BELONG TO CHINA, BUT THAT HONG KONG ITSELF COULD REMAIN A FREE PORT AND AN INTERNATIONAL FINANCIAL CENTRE.

FOREIGN INVESTMENT WOULD NOT BE AFFECTED. HONG KONG WOULD BE MANAGED

BY ITS INHABITANTS, INCLUDING SUCH FOREIGNERS AS WERE RESIDENT THERE, BUT SOVEREIGNTY WOULD BE CHINESE.

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4. MR HEATH SAID THAT HE SUPPOSED THAT IN SUCH CIRCUMSTANCES

BRITAIN WOULD STILL BE ABLE TO MAKE ITS CONTRIBUTION TO HONG KONG'S

PROSPERITY, WHICH WAS ALSO SO MUCH TO THE ADVANTAGE OF CHINA, DENG REPLIED THAT THERE COULD BE A LOCAL GOVERNMENT IN HONG KONG. THE

NEW CHINESE STATE CONSTITUTION WOULD SPECIFICALLY ALLOW FOR THE CREATION OF SPECIAL ADMINISTRATIVE ZONES. THE LOCAL GOVERNMENT WOULD BE FORMED BY THE INHABITANTS, WHETHER CHINESE, BRITISH OR OF OTHER NATIONALITY. SUCH PEOPLE COULD EITHER BE EMPLOYED BY THE LOCAL GOVERNMENT. OR THEMSELVES BE MEMBERS OF THE LOCAL GOVERNMENT.

THE VARIOUS SYSTEMS'' OF HONG KONG WOULD REMAIN UNCHANGED.

IT COULD USE THE NAME HONG KONG: CHINA'' AND COULD MANAGE ITS OWN

NON-GOVERNMENTAL TRADE AND COMMERCIAL RELATIONS WITH OTHER COUNTRIES.

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