TNAG-1621-FCO40-2235-Relations-between-Hong-Kong-and-China-1987 — Page 58

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13.

5-

In summary, all likely longer term developments point to an increasing inter-dependence between Hong Kong and China, particularly if the pace of economic reform and

modernisation in China is maintained. While China will

continue to derive substantial economic benefits from Hong Kong, particularly in respect of foreign exchange earnings, Hong Kong would probably suffer most if its economic relations with China were sharply reduced or cut

off.

Role of the Hong Kong Government

14.

In accordance with its long-standing policy of minimum interference in the market mechanism, the Hong Kong Government should continue to provide a sound legal and institutional framework for promoting smooth and efficient business operations, while leaving business decisions to private enterprise. Any suggestion for the active

promotion of economic relations with China through greater Government intervention or involvement in private business

affairs should be treated with caution. The rapid growth in economic links with China in recent years has been achieved almost entirely as the result of private sector initiative. This suggests that active Government

intervention is probably unnecessary. There is a risk that it could be counter-productive.

15.

As

Hong Kong's long-standing commitment to free

trade and the free flow of funds should remain intact.

the Joint Declaration provides for the maintenance of the

status of Hong Kong as a free port, an open economy and a separate customs territory after 1997, Hong Kong will continue to enjoy complete autonomy in the management of its own economic affairs. In this regard, there must be a

limit to the degree of economic integration between Hong

Kong and the Pearl River Delta region. The idea of a

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