TNAG-1263-FCO40-1606-Parliamentary-contacts-on-the-future-of-Hong-Kong-1983 — Page 93

CONFIDENTIAL

Chinese Propaganda

12. This has been strident, though lately toned down. Contradictory elements. On one hand says we are rigid and "colonialist". On other, implies we have conceded sovereignty.

Not so. We have

conceded nothing.

Hong Kong Dollar and Stock Market

13. Cumulative effect of Chinese propaganda has produced sharp falls in Hong Kong's stock market and dollar "exchange rate despite underlying strength of economy. Measures introduced by Hong Kong Government late September to help stabilise local currency. Further important measures on 15 October. Key element is indirect pegging

of HK dollar to US dollar. Working well so far.

Parliamentary interest

14.

Realise renewed Parliamentary interest likely. Hope Parliament will understand delicacy of problem and fragility of confidence in

Hong Kong. Important that nothing is said in public which may affect confidence or make task of negotiations more difficult. Confidential negotiation in calm atmosphere offers best prospect of successful outcome.

"

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CONFIDENTIAL