TNAG-1243-FCO40-1557-Future-of-Hong-Kong-1983 — Page 123

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CONFIDENTIAL

P

CALL BY LORD SHAWCROSS ON MR RICHARD LUCE MP, MINISTER OF STATE,

10.15 AM, ON WEDNESDAY 7 SEPTEMBER 1983.

Present

Mr Luce

Lord Shawcross

MIKKO40 | 11

RECEIVED IN REGISTRY

10 SEP 1983

Mr Warren-Gash, Private Secretary

INDA

PA

Mrs Priest, HKD

1. There was some initial discussion about Brunei. Lord Shawcross said that his concern has been to ensure that the ending of the arrangement with the Crown Agents did not spill over into a clash between the Brunei and UK Governments. He personally had been in no way involved, and only learnt of the decision after it had been

taken.

2. Lord Shawcross then said that he was likely to visit, China within the next few months. His business interests took him there frequently and he was on good terms with several Chinese personalities including the Chinese Ambassador here. He might also pass through Hong Kong. His impression was that the Hong Kong people were very nervous indeed about their future. In his professional capacity he had seen evidence of significant capital outflow from Hong Kong. Mr Luce asked about the scale of this. Lord Shawcross explained that it was substantially greater than was usual. Although the Hong Kong market had recently picked up, it had been extremely volatile since September 1982 and was unlikely ever again to reach former levels of buoyancy. This was partly because the market had become over-heated at one stage, and share prices had soared way above levels that could be sustained. Chinese investors were very worried about the future.

3.

But

Mr Luce stressed the importance of reaching an agreement with the Chinese which would maintain Hong Kong's stability and

prosperity. Did Lord Shawcross know what the Chinese considered to be the essential components of these? Lord Shawcross thought the

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