TNAG-1239-FCO40-1552-Future-of-Hong-Kong-1983 — Page 153

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was normally placed for at least 20-25 years.

Any investor who

saw 1997 approaching would question whether he should put his money in Hong Kong and in reaching his decision would take into account the fact that the situation would change in 1997 and that China would acquire sovereignty over a large part of the area at that time. So he would have to consider how to assess China. He would take into account the recent turbulent past, the very different political system and the fact that the modernisation programme was only just beginning. Those factors would lead him

to conclude further investment was too risky. There were already signs that investments were moving out. The process might continue in the coming months and years. At the moment, the investor was bound to see, at best, uncertainty. The atmosphere for investment was very bad. The likelihood was that a good, deal more people would move money to other financial centres which offered a more

certain prospect of return. This was why she was proposing talks based on a certain formula. She wanted to provide enough assurances for investors to keep their money in Hong Kong so that prosperity could be maintained. To this end, we should agree, in further talks, that after 1997 British administration would continue with

the same certain system of law, the same certain political system and the same certain independent currency. She believed that this would provide the certainty after 1997 that investment would continue and prosperity be maintained. This would not only benefit the people of Hong Kong but would continue to benefit China which profited greatly from a prosperous Hong Kong. If we could through talks at a later stage arrive at such an agreement there would be a tremendous upsurge in confidence. She could then go to the British Parliament and say that because there was agreement on the continuation of British administration for a considerable time

and because prosperity would thereby be maintained we could consider the whole question of sovereignty, including sovereignty over Hong Kong and Kowloon. China would get what she wanted. Prosperity would be maintained both before and after 1997. The solution would be acceptable to Hong Kong because every survey showed that the people of Hong Kong wished the British system

of administration to be maintained.

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/Her