TNAG-1241-FCO40-1554-Future-of-Hong-Kong-1983 — Page 82

makes no more than

passing L

Mrs Priest, HKD (WH 305)

508

Reference

CONFIDENT TAL

HKK 04071

RECEIVED IN REGISTRY

S SEP 1983

DESK OFFICER INDEX

PA

и

HONG KONG: ARTICLES IN CHINA QUARTERLY, SEPTEMBER 1983

REGISTRY

Action Taken

KSP

1. Your minute of 1 September. Despite its title Professor Pye's article does not deal in any detail with Hong Kong's international position, but is in fact a commentary on Chinese and British policies on the territory's future. As such it is seriously deficient. Even with due allowance for the fact that he has had to rely largely on speculative press reports, on several points of both judgement and fact. Professor Pye's article is very wide of the mark compared with the best journalists' analyses.

2.

The main point on which I disagree with Professor Pye is his assessment of the effect of a Chinese take-over on Hong Kong's economic value to China. He argues (p.462) that in the event of a Chinese take-over 'it is conceivable (and the Chinese probably believe it likely) that they would end up with more foreign exchange' and that 'a drop of nearly 70 per cent in Hong Kong's earning would still provide China with more foreign exchange than she now receives'.

3. Professor Pye does not give any calculations to support these assertions which overlook the key point that Hong Kong's continued prosperity and hence its value to China will depend on the maintenance of confidence. The Chinese have themselves made clear that they regard the preservation of Hong Kong's economic system on present lines as important for their interests, even though less important than a reassertion of sovereignty: Professor Pye surely goes too far in his conclusions (p.468) in dismissing as 'wishful thinking' the views held by 'defenders of Hong Kong's status quo about China's financial needs for foreign exchange.

Among many other contentious points and inaccuracies in the article, the following seem to me to require comment:

4.

Labour Party policy on Hong Kong (Page 457): I am not aware of any official statement by the Labour Party that it would be

'prepared to abandon' Hong Kong. The Party's Manifesto for the last General Election said: 'We shall hold talks with China with the aim of securing a peaceful and prosperous future for the people of Hong Kong'.

b.

British policy in 1982 (pages 458-9): Professor Pye's account Is inaccurate and unfair, eg in suggesting that statements by the Prime Minister caused 'shock' and anxieties' in Hong Kong. In fact Chinese statements were responsible for the weakening of confidence in late 1982.

China's attitude to an elected government in Hong Kong (Page 465): The Chinese attitude is not now as clear as suggested in the article. Recent Chinese statements on this point have been inconsistent, but have included some which imply that the Chinese might be willing to consider some form of popular franchise. While referring to the Chinese position on the inseparability of sovereignty and administra- tion, the article emits to mention Chinese statements on 'Hong Kong people running Hong Kong' which qualify this concept.

A

CODE 18-77

CONFIDENTIAL

/a.