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essential if Hong Kong is to preserve its current status as an economic
center for the region. In particular, Hong Kong is said to need:
--an internationally accepted, easily convertible currency.
--a continuation of current British style laws and institutions.
a clear PRC agreement that China will not interfere in the ter-
ritory's economic development policies and practices.
China's Policy
China is likely to sustain these basic conditions and succeed in
fostering a smooth transition for Hong Kong under formal PRC sovereignty,
according to a viewpoint prevalent among many leading observers interested
in Hong Kong's future. This is so because China would otherwise jeopardize
the reported important interest the PRC has in the continued economic pros-
perity and stability of the territory. However, a more skeptical view holds
that China's leaders may be prone to interfere more directly in the adminis-
tration of the territory, in part because they may judge that China can
effectively manage the complex social-economic system there, or because they
may judge that it is in PRC interests to exert more direct control, regard-
less of how it might disrupt prevaling order in Hong Kong. Skeptics tend to
believe that a more assertive Chinese policy toward Hong Kong could relatively
quickly undermine the fragile underpinnings of the territory's prosperity and
stability.
At present, it is far from clear as to what kind of approach Beijing will
follow toward Hong Kong. Chinese policy pronouncements have been vague. PRC
policy may have been disrupted by the sudden death in June 1983 of Liao Chengzhi,
who for years had been the senior Chinese leader responsible for Hong Kong
matters.
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