Sheets and Income and Expenditure Statements in an attempt to minimise the damage. However, all DTCs are required under revised regulations to be out of the short term deposit market by 30 June. This no doubt will increase the strain on
me.
Hong Kong has shown in the past that this type of crisis, sufficient to deal a serious blow to less ingeniously – one is almost tempted to say 'ingenuously' - managed economies, can be coped with. Growth in export trade would no doubt soon have brought a smile back to the bankers' faces as funds began to flow in again, albeit from a different source. The smile unfortunately can be little more than wistful whilst the Hong Kong dollar continues to linger at its lowest point in meaningful history, with, many bankers fear, the bottom yet to be hit.
The Hong Kong dollar had been strengthening steadily for the first half of 1982. It then eased off during the third quarter, and this helped Hong Kong's exports for the latter part of 1982, although also sustaining an uncomfortably high rate of inflation at a time when inflation rates elsewhere were beginning to fall. The subsequent fall in parity with the US dollar of some 20 per cent between September 1982 and the date of reporting can, however, be attributed to one cause alone – loss of confidence directly arising from China's declared plans for the future of Hong Kong.
Confidence - a fragile flower Whether such a loss of confidence is justified is of course the key point. Confidence, it has been frequently enough pointed out, is a fragile flower, and perhaps the situation might have been eased by a statement from the British side, rather than a continuous series of non-statements regarding the need to 'preserve confidentiality'. While these might have been accepted at face value at first, they now look more thin with each reiteration, and are treated by the sceptics as meaning no more than 'we don't know, so we can't say'.
It is quite clear that the vast majority of Hong Kong people of all backgrounds would prefer the status quo. This is no particular tribute to Britain or the British, but simply a recognition of the virtues of the present system. From the People's Republic, however, the jigsaw is equally clearly beginning to show another pattern. Some pieces that emerge have to be thrown aside, but others fit together neatly, whether they emanate from an official spokesman or are carried back as the result of 'confidential' discussions with Chinese leaders, which cease to be confidential the moment the latest visitor steps back over the border. It is clear that China intends to assert its claim to Sovereignty over the whole of Hong Kong in more than merely symbolic form. This would seem to require a British withdrawal and a handing over to some new form of government for the Territory.
Preserving prosperity and stability
It is equally clear that China intends to administer Hong Kong under a constitution that is radically different from that applying throughout the rest of the people's Republic - for the time being, at least. It is virtually committed to the preservation of a free enterprise economy and to the taking of whatever steps may be necessary to preserve 'prosperity and stability'.
There can be no doubt that China takes Hong Kong seriously; that it recognises its value, and that it can maintain this value only with the co- operation of the local people working under a system with which they are familiar and with which they feel at home. The question of course is - what will this system be and how will it uphold what are considered to be the two essentials; ie. a freely convertible, independent currency and an independent legal system that would in turn provide for clear rights to the ownership of property and for freedom of movement and association?
A third essential is the calibre and experience
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