TNAG-1238-FCO40-1551-Future-of-Hong-Kong-1983 — Page 57

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The American economic interest in Hong Kong is large, as the United

States is the colony's largest trading partner ($8.6 billion in 1982),

and its largest foreign investor (totaled $2.7 billion by 1982).

Beijing leaders also have explicitly linked their policy on reunification

of Hong Kong with the mainland with their policy on reunification

regarding Taiwan. As a result, Americans are closely watching Hong

Kong developments for clues as to possible precursors to PRC policy

toward Taiwan, where the United States has important interests including

legal ties under the Taiwan Relations Act. At present, British and

Chinese sensitivities over the Hong Kong issue appear to compell the

United States Government to adopt a low public posture regarding the

current talks. There also appear to be only a few limited options

the United States Government could adopt in order indirectly to

influence the situation to the advantage of American interests.