TNAG-1256-FCO40-1589-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 103

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ix)

x)

xi)

centre.

Hong Kong dollar to continue to circulate freely and remain

fully convertible;

Financial independence;

Hong Kong to maintain its existing external relations in economic and cultural fields.

6.

In first three rounds concentrated on educating Chinese about basis for confidence. Gave them papers on specific aspects (its economic, financial, commercial and legal systems). Clear Chinese tended to dismiss this as justifying continuing British

administration for its own sake.

7.

Our present strategy is to induce Chinese to concentrate on detailed discussions of practical measures. Would like to draw them out on SAR plan. Made some headway in latest round. We stated that if, on the basis of the Chinese proposals arrangements could be agreed that would ensure the maintenance of stability and prosperity, HMG would recommend to Parliament an agreement on those lines. This was well received. There is a reasonable chance of getting more meaty discussion on that basis though the Chinese repeatedly try to bring the discussions back to acceptance of the transfer of sovereignty and right of administration as a pre-condition.

8. Most Hong Kong people sceptical of SAR idea. Clear that Chinese either do not understand or deliberately ignore complexities of Hong

Kong's structure. Insufficient for them to say that this or that aspect of lifestyle will continue. Investors need proof of effective insulators against Chinese interference. At present provided by British administrative link.

9.

Contradictions in Chinese propaganda.

On one hand accuses us of

rigidity and 'colonialism'. On the other implies that we have conceded Chinese premise on sovereignty. Not so. We have conceded

nothing.

10. Effect of propaganda on Hong Kong economy. On 24 September

Hong Kong dollar at all-time low against US dollar.

Hang Seng Stock

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