TNAG-1241-FCO40-1554-Future-of-Hong-Kong-1983 — Page 121

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ated accounts and into other investments

has remained a cause of strong

7/ concern. If the decline degenerates into a run on the Hong Kong dollar,

resulting in its collapse, it could seriously undermine Hong Kong's future

viability as an independent economic entity. It also might prompt the

PRC to move rapidly to intervene and take more direct control, well before

1997, in order to halt the decline in value of the territory caused by the

dollar's collapse.

At present, many Hong Kong observers would prefer to see the British

administration remain in Hong Kong, but they appear to judge that China's

recent strong position on the need to reassert Chinese sovereignty makes

that prospect remote. Assuming that China will regain at least de jure

sovereignty by 1997, therefore, they judge that several conditions are

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, freely 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 development policies and practices.

7/ For background on Hong Kong's recent economic developments see U.S. Department of Commerce. Foreign Economic Trends and Their Implications for the United States. Hong Kong. 1983. See also, Far Eastern Economic Review, March 17, 1983.