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4. Mr Donald emphasised the concern of the people of Hong Kong over the negotiations, and mentioned the problem of press
coverage. The Chinese were inclined to conduct negotiations on
two levels, one at the confidential talks and one in public, in
order to put pressure on the British side. It was unwise there- fore to believe everything which appeared in the press.
It was
the course of the confidential talks which mattered.
5. In response to a question from the Luxembourg representative
about the reaction of the business community, Mr Donald said that
Hong Kong opinion could be volatile. The stock exchange tumbled
after the Prime Minsiter's visit in September 1982 because of
anxiety that no solution could be achieved. But the situation
had recovered. The business community was watchful, but there had
been no haemorrhage of funds. There was inevitably a wide
spectrum of views in the community. There was also some internal
movement between Hong Kong and US dollars. While some funds might
have been more moved, new investment was still coming in partic-
ularly from Japan. It was a common British and Chinese interest
that the negotiations should be conducted in a way not to destroy
investors' confidence.
6. In response to a question from the Danish representative
about whether the principles of any agreement on Hong Kong would
be applicable to Taiwan, Mr Donald said that the Chinese would
probably see Hong Kong and Taiwan as different problems. Taiwan
was an internal dispute deriving from the civil war, while Hong
Kong was a problem of colonialism. But although there was no
direct link, a solution on Hong Kong might help the Chinese in
their dealings with Taiwan.
7.
It was agreed with the Presidency that this briefing should
be regarded as entirely off-the-record.
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Artmeld
A E Donald
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