TNAG-1255-FCO40-1588-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 74

2. THE GOVERNOR BRIEFED WEINBERGER ON THE SITUATION IN HONG KONG

AND THE STATE OF THE TALKS WITH THE CHINESE ON STANDARD LINES.

HE SAID THAT THE TALKS WERE SET IN A FRAMEWORK OF GOOD RELATIONS

BETWEEN BRITAIN AND CHINA, AND BETWEEN HONG KONG AND CHINA. FOLLOWING A SERIES OF DIPLOMATIC CONTACTS, FORMAL TALKS HAD BEGUN

IN JULY. THERE HAD BEEN THREE ROUNDS IN JULY AND AUGUST AND A

FURTHER ONE IN SEPTEMBER. THE NEXT WAS DUE TO TAKE PLACE #N

OCTOBER. THE CHINESE HAD BEEN TAKING A TOUGH LINE. THERE WAS NO

SECRET ABOUT THEIR POSITION WHICH HAD BEEN STATED PUBLICLY. THEIR

PLAN WAS THAT SOVEREIGNTY AND ADMINISTRATION SHOULD BE RETURNED

TO CHINA BUT THAT EVERYTHING ELSE SHOULD REMAIN THE SAME. THE

PROBLEM WAS THAT HONG KONG PEOPLE DID NOT BELIEVE CHINESE ASSERTIONS THAT THEIR PRESENT FREEDOMS AND LIFESTYLE WOULD REMAIN UNCHANGED, AND THEIR CONFIDENCE HAD BEEN FURTHER ERODED BY THE CURRENT

BARRAGE OF PROPAGANDA WHICH THE CHINESE WERE DIRECTING AT THEM.

THE RESULTANT POLITICAL UNCERTAINTY HAD LED TO A WEAKENING OF

THE HONG KONG DOLLAR DESPITE THE GOOD PERFORMANCE OF THE

ECONOMY. THE MEASURES TAKEN IN HONG KONG HAD SERVED TO STABILISE

THE EXCHANGE RATE OF THE LOCAL UNNT AGAINST THE U.S. DOLLAR, BUT THE HONG KONG DOLLAR WAS STILL UNDERVALUED.

3. LOOKING FORWARD TO THE NEXT ROUND OF THE TALKS, THE GOVERNOR

SAID THAT WE HAD BEEN TRYING TO GET THE CHINESE TO UNDERSTAND THE

COMPLEXITY OF HONG KONG AND THE REASONS WHY INT WORKED SUCCESSFULLY

NOW. WE HAD NOT YET MADE MUCH HEADWAY. THERE WAS LITTLE DOUBT THAT

THE CHINESE WANTED TO MAINTAIN STABILITY AND PROSPERITY: THE

QUESTION WAS WHETHER THEY WERE PREPARED TO PAY THE NECESSARY

PRICE. THEY HAD MADE IT CLEAR THAT THEY WERE NOT AIMING FOR CHANGE

UNTIL 1997, BUT THEIR OCCASIONAL REMINDERS THAT THEY MIGHT REVIEW

THAT TIMETABLE IF THERE WERE DISTURBANCES MN HONG KONG DID NOT

HELP.