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tential threat but it and all other groups are currently pursuing the maintenance of stability in HK, although the KMT and Triads
can be expected to exploit any deteriorating situation to their
own ends. It is believed that China tends to credit the last two
with greater influence and capacity to cause trouble than they actually possess.
19.
There are no known indigenous terrorist groups. The difficulties which external groups would encounter operating in Hong Kong make the threat of externally inspired terrorist attack very unlikely. The threat of internal sabotage by disaffected personnel may arise as 1997 approaches and assassination
attempts, currently considered unlikely, could be targeted
against prominent or key personnel.
20. In the short term (until approximately the early 90's), there is a degree of confidence in Hong Kong's economic prospects; thereafter the outlook is unpredictable. The prospects of making
a quick return on investment post 1992 are bound to diminish.
Additional factors which could adversely affect confidence include
trade protectionism, economic recession, ill-considered political
statements by the Chinese, the death of Deng Xiao Ping, Chinese
leadership changes, flight of talent, capital withdrawal, or a
weakening of the PRC's liberal policy.
21. A marked downturn in the domestic economy or a wider
economic crisis, particularly if it led to a substantial increase
in unemployment and a fall in real incomes, could trigger
unease and result in a loss of confidence in the future of Hong
Kong. In the worst case, if confidence eroded completely, further investment fund withdrawals, spiralling unemployment, pressure on the HK dollar and accelerating inflation could
follow a recipe for civil unrest. In the final years it is
conceivable that there will be an increase in the flight of
capital and talent. The loyalty of publie offieiele and police-
may be tested – particularly the loyalty of those dealing wi
the PRCG, who may be tempted to re insure their position by -
being less than resolute. In the event of loss of confidence
in HK, or major civil disturbances, the loyalty and reliability
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