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following the thorough and detailed agreement with the Chinese,
there was no longer a problem. Already, China was Hong Kong's biggest trading partner and the Hong Kong economy with a 5% growth rate was doing well. It was necessary, although difficult, for the
Chinese to come to understand the significant and sensitive nature of business confidence in Hong Kong. Tokyo's growth as a financial
centre could pose a long-term threat to Hong Kong's regional financial role. However this would be offset by the exciting
prospect of Hong Kong, Canton, Macao and Guangdong, an area
including some 60m people and good communications, turning the region into a thriving industrial and services centre the size of Britain. Mr Hung sounded a general note of caution. The Chinese frequently changed their policies. They were also ambitious, seeking regional and eventually world hegemony. It was necessary to take precautions. Mr Adams agreed that many viewed China with suspicion:
USSR; Indonesia; India. On the other hand, China had immense
problems and was evolving only slowly. Their essential dilemma was how to maintain discipline (such as population control) while at the
same time releasing the energies of the people through competition and devolution. It was important for them to get the balance right.
Both the UK and Vietnam would benefit from a more mature, less
nervous China. Mr Hung agreed with this analysis. The Vietnamese saw serious disagreements among the Chinese leadership and many problems in their development. In this, there were parallels with Vietnam, which also needed help from outside but had only a limited capacity to absorb this.
8. The meeting ended at 4.30 pm.
SOUTH EAST ASIAN DEPARTMENT
27 October 1986
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