TNAG-1255-FCO40-1588-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 196

SECRET

6. Most people in Hong Kong sceptical of this SAR idea. Evidence

suggests Chinese have not thought through most detailed issues involved. Chinese seem to assume that by saying Hong Kong will continue to be financial/commercial centre or that currency will continue to be internationally tradeable, this will just happen. Hong Kong people and investors need assurance of effective

guarantees against Chinese interference.

7.

Evidence suggests Chinese do not fully understand how Hong Kong works. We have sought to educate them about complexities of its systems and basis for confidence, particularly in the Hong Kong

dollar.

But

8. Central issue is to devise package in which Hong Kong people will have confidence. We see link to Britain and systems prevailing as providing guarantee for Hong Kong. Difficult for Chinese. must seek arrangements which will reassure Hong Kong opinion and investors. Given joint Sino-British aim, confident such an arrangement can be worked out.

{

9. British Government obtains no revenue from Hong Kong other than that of normal trading partner, contrary to what Chinese seem

think.

10. Important nothing said or done to damage confidence in Hong

Kong.

Grateful for your understanding.

Sovereignty

•

Chinese and British positions well-known.

We fully realise importance of sovereignty issue to China. We are not inflexible. Willing to consider any solution acceptable to Britain, China and

Hong Kong.

SECRET