TNAG-2487-FCO40-3618-Future-relations-between-Hong-Kong-and-China-1992 — Page 69

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collapse of Hong Kong would undermine the prospects for peaceful

re-unification with Taiwan; it would do untold damage to the

efforts of modern economic development at home and undermine its

policies in the Asia-Pacific. Correspondingly, and unlike the

British government, the Chinese have everything to gain from a

smooth transfer of authority. Indeed it could be argued that it

has become central to Deng Xiaoping's strategy at home

abroad. Although Hong Kong has become increasingly important in

the reform and the opening up of the Chinese economy since these

were first begun in December 1978, it has acquired even greater

significance since the end of the Cold War. Deng's response to

the collapse of Communism in Eastern Europe and the former Soviet

Union has been to stress that the continued survival of the

Communist regime in China depends on accelerating the rate of

economic development so as to increase the prosperity of the

Chinese people and to strengthen the state in the long run. This

can only be achieved by continued economic reform at home and by

opening the door still wider to the international capitalist

economy and especially to deepening the process of economic

integration with the dynamic economies of the Asia-Pacific. Hong

Kong is absolutely critical to all of this. Quite simply Deng

cannot afford to allow the Hong Kong experiment to fail without

putting at risk his whole strategy for the development of his

country and the survival of his Communist Party in its present

form.

It is perhaps that fundamental

coincidence of interests

between the two sides that accounts for the progress that has