TNAG-2142-FCO40-3061-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-1990 — Page 99

CONFIDENTIAL

125663 MDHIAN 6041

CONFIDENTIAL

FM PEKING

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TO DESKBY 271030Z F C O

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INFO IMMEDIATE HONG KONG, UKREP JLG HONG KONG, B T C HONG KONG

HONG KONG PERSONAL FOR GOVERNOR AND POLITICAL ADVISER.

UKREP JLG HONG KONG PERSONAL FOR GALSWORTHY.

BTC HONG KONG PERSONAL FOR PETER HEAP.

PART TWO OF TWO.

8.

LI PENG HOPED THAT HONG KONG WOULD MAINTAIN ITS PROSPERITY

NOT ONLY UP TO BUT AFTER 1997. IT WAS IMPORTANT TO MAINTAIN ITS

CAPITALIST STRUCTURE AND TO PRESERVE ITS POSITION AS THE WORLD'S FINANCIAL, TRADING AND TRANSPORTATION CENTRE. THIS ACCORDED WITH THE INTERESTS OF CHINA. BUT HE HAD TO POINT OUT THAT THE POLITICAL STABILITY AND THE STEADY ECONOMIC PROGRESS ON CHINA'S

MAINLAND WAS AN INDISPENSIBLE CONDITION FOR THE PROSPERITY AND

STABILITY OF HONG KONG. TRADE BETWEEN HONG KONG AND CHINA WAS

RUNNING ON A LEVEL OF US DOLLARS 20 BILLION PER ANNUM. HONG KONG'S ROLE AS AN ENTREPOT FOR THE MAINLAND WAS VITAL. THE SURCHARGES, HOWEVER, ALSO HELPED HONG KONG. ABOUT ONE THIRD OF ITS TOTAL EARNINGS WERE DERIVED FROM PROFITABLE TRADE WITH CHINA.

9.

LI PENG SAID THAT HE NATURALLY TOOK AN INTEREST IN THE PROBLEM OF CONFIDENCE IN HONG KONG. BUT HE WAS NOT REALLY WORRIED ABOUT IT. HE BELIEVED THAT WHETHER COMPETENT PEOPLE REMAINED OR NOT DEPENDED ON THE CONTINUED PROSPERITY OF HONG KONG. IF HONG KONG'S PROSPERITY WENT DOWN IT WOULD NOT BE POSSIBLE TO KEEP THE PEOPLE THERE. AFTER 1997, WHEN CHINA RESUMED THE EXERCISE OF ITS SOVEREIGNTY OVER HONG KONG, THE HONG KONG SPECIAL AUTONOMOUS REGION WOULD HAVE A HIGH DEGREE OF AUTONOMY, AND CHINA WOULD GUARANTEE THAT IT CONTINUED TO BE ABLE TO MAKE PROFITS AND TO HAVE ITS OWN WAY OF LIFE. THERE HAD BEEN COMMENT ON THE BRITISH WISH TO GRANT RIGHT OF ABODE TO 225,000 PEOPLE. THE FOLLOWING OPINION WAS NOT DERIVED FROM HIM, BUT HE HAD BEEN READING WHAT SOME ANALYSTS HAD BEEN SAYING. THEY HAD SUGGESTED THAT THE NATIONALITY PACKAGE SHOWED THAT THE UK WAS NOT CONFIDENT ABOUT ITS OWN INTEREST IN

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