Deng Xiaoping urged London to persuade HSBC to stay in Hong Kong

Chinese leader was keen to maintain investor confidence in city before handover, files reveal

PUBLISHED : Tuesday, 07 January, 2014, 3:14am
UPDATED : Monday, 03 October, 2016, 5:52pm

Chinese leader Deng Xiaoping urged the British government three decades ago to persuade the Hong Kong and Shanghai Bank not to relocate from Hong Kong in order to maintain investor confidence in the city.

His call was made during a meeting with British foreign secretary Geoffrey Howe in July 1984.

According to records of the conversation compiled by the British government, Deng mentioned Jardine Matheson, which moved its legal domicile from Hong Kong to Bermuda in March 1984, and rumours that the bank was moving its capital out of Hong Kong.

"He [Deng] hoped the governor could persuade the Hong Kong and Shanghai Bank not to move out," the record said.

The conversation record was among files recently declassified from Britain's National Archives.

Howe told Deng the bank "had no plan to move".

The bank moved its headquarters from Hong Kong to London in the early 1990s.

The decisions by the bank and Jardine Matheson were widely seen as votes of no-confidence in China's ability to rule Hong Kong.

Deng also hoped the Hong Kong government would not undertake very large projects before 1997 as he feared they would be a substantial drain on the posthandover administration's resources.

The declassified files also revealed that the negotiations on Hong Kong's future were on the verge of collapse in mid-1984 as London and Beijing were at odds over the location of the SinoBritish Joint Liaison Group that later discussed handover arrangements.

Then governor Edward Youde told executive councillors in Hong Kong that unless the question of the location of the Joint Liaison Group in Hong Kong could be settled during his visit to Beijing, "there would be no movement on other matters, and more serious, the talk would fail".

"We were therefore faced with the prospect of breakdown. Very clearly the Chinese were not bluffing," Youde wrote in a telegraph to the British government. "They said it clear thee deal was off if we had insisted on returning to London."

The British government was worried that the group's location in Hong Kong would undermine the administration of Hong Kong before the handover. Both sides finally agreed it should have its principal base in Hong Kong from July 1988 and continue its work until January 1, 2000.

Meanwhile, Chung Sze-yuen, then senior unofficial member of the Executive Council, proposed in July 1984 holding a referendum in Hong Kong to test the acceptability of the agreement reached between Britain and China.

But Youde opposed the idea. The governor cited reasons such as low rates of registration and turnout for the referendum.