TNAG-1312-FCO40-1687-Future-of-Hong-Kong-views-and-involvement-of-Australia--Cana-1984 — Page 81

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of our GDP, we were heavily dependent on the wealth and lack of protectionism of other countries. The Chief Secretary added that internally generated investment was the real key to the economy. The Financial Secretary added that since February 1982, when interest tax on foreign currency deposits was

abolished, there had been a growth in deposits of $125 billion

(or over $100 billion after inflation).

11. In reply to a question, the Governor said that the professional and middle classes i.e. the mobile group, were suspending judgement until the outcome of the negotiations

was known. Mr Hawke asked what they wanted to hear in September. Did they really want the Chinese to be more specific about their plan ? The Governor said that what they wanted

was assurance that there would be no interference.

There was

no hostility between Hong Kong and China and our trade and other relations were good. But people wanted to be reassured that,

if the insulator of the UK presence was removed, there would be

other means to prevent interference.

12.

Referring to the 12-point plan, Mr Hawke commented that the

Chinese had already said that the legal system would remain in

force. If this was right, this must surely be reassuring. The

Governor replied that the Chinese had said that the laws would

continue. But they had not commented on the essential separation

of the legislature and the executive. It was not just a question

of the laws, but also the way in whcih the legal system operated.

13. The question was raised as to how to reconcile optimism

over the economy with recent problems over the exchange rate.

The Financial Secretary said that there had been a flight of

foreign currency last September but, since then, exports had been

sold at an appreciated rate. But he agreed that it would be wrong to pretend that all was well with the economy.

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