TNAG-1242-FCO40-1555-Future-of-Hong-Kong-1983 — Page 51

THE RT. HON. LORD HAILSHam of St. MarYLEBONE, C.I., I.R.S., D.C.L.

LORD CHANCELLOR

CONFIDENTIAL

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No.10,

27th September, 1983

Sir Geoffrey Howe, QC MP

Secretary of State for Foreign

and Commonwealth Affairs,

Foreign and Commonwealth Office, London, SW1A 2AL.

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Mr. S. Yol

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My dear Geoffrey ·

I think I should report shortly on my visit to Hong Kong. The Seventh Commonwealth Law Conference demands no special comment. It was very well run and by common consent it was pronounced a success. I made two speeches, the first opening the Conference, the second laying the foundation stone of the new Court building which was almost complete. Both speeches were potentially politically sensitive. Both received fairly wide coverage on the various media. But neither, so far as I am aware, excited adverse comments.

This was the more satisfactory since my visit coincided with the resumption of talks in Beijing (Pekin) at which Sir Edward Youde was present as a member of the British delegation, and with a currency crisis engendered by uncertainty as to the outcome of the talks. In my opinion this crisis was entirely brought about by the repeated breaches of confidentiality and the aggressive attitude exhibited by the People's Republic of China (PRC). It is for consideration whether this was done with the deliberate intention of creating panic or whether it was simply an example of the total inability of Communist regimes to understand the meaning of confidence or enterprise or the working of a free enterprise economy. In neither event is the prospect particularly encouraging. Despite attempts to make people believe that they do not wish to destroy the economy of Hong Kong which even now gives them a useful source of hard currency, by their actions the PRC leaders are creating a situation which, if it is not remedied, might be quite difficult to hold. In the meantime they blame us for "playing the economic card" and "playing the public opinion card". But we are not playing cards. The Governor (who as you know has served in Pekin) believes (I think rightly) that, whatever the explanation of their behaviour, the "political imperatives" of the PRC take such a dominant place in their thinking and actions that they are simply indifferent to economic consequences. If this is so, the outlook is bleak, and whether or not the talks are resumed is simply a question of political judgment.

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