TNAG-1307-FCO40-1664-Future-of-Hong-Kong-1984 — Page 97

CODE 18-77

CONFIDENTIAL

Reference MKK040|1.

RECEIVED IV NRGISTRY

-51984

DES

Mr Xift

FUTURE OF HONG KONG:

CALTEX

4

Action Tekos

CH11012

1. Dr D J O'Brien, Chief Economist from CALTEX Petroleum Corporation in Dallas, Texas called on me on 7 February to talk about the future of Hong Kong. He had been given my name by the Embassy in Washington.

2.

1

on

He has been visiting Europe to draw up for CALTEX reports on political and economic developments in several parts of the world, principally in the Middle East but also on Hong Kong. He himself had in the past had a good deal to do with Hong Kong and, in his earlier position working for the US Department of Energy in negotiations with China financial and economic matters. His main concern in Hong Kong is over property owned there by CALTEX and their activities in Shenzhen economic zones. He realised I could say nothing about the content of our talks and his main interest was in what we thought the outcome might be, how soon an agreement might be reached and what the current state of confidence was in Hong Kong. I outlined in very bland terms the common aim of the talks, the particular points to which we attached special importance and our hope that an agreement could be reached sooner rather than later in the interests of confidence. In answer to questions I said we did not regard ourselves as bound by China's September 1984 'deadline'. It was reasonable to expect some kind of announcement then but one could not in all honesty expect a detailed agreement to come that soon. I stressed that the

talks were taking place in а friendly and constructive atmosphere and that we were optimistic about reaching a satisfactory agreement which enabled Hong Kong to continue as а prosperous and stable place.

3.

We discussed the current state of confidence in Hong Kong including the Hang Seng Index, Hong Kong's exports and the taxi drivers' dispute last month. I said things had settled down in the past month or so compared with the agitated state of six months ago. It was interesting that public pronouncements by the Chinese of their plan no longer seemed to have an adverse effect on the Hang Seng Index. Nonetheless confidence remained fragile and Hong Kong was a volatile place. In answer to questions I said I thought agreement had to be reached in the next two or three years and I saw a very good chance of this happening.

He

4. Dr O'Brien was grateful for this discussion. He said he would be producing a report for the Company's Board. Не would not quote me or attribute anything directly to the FCO but he would feed in what I had said which was very much in line with what he understood the position to be already. expected his report to be generally optimistic and he did not envisage CALTEX in any way reducing their operations in Hong Kong or China in the foreseeable future.

/5.

He

CONFIDENTIAL