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5.

Although the Chinese Government in theory regard

all the Hong Kong treaties as unequal and not therefore

binding on themselves, in practice they still connect

the need for negotiations with the expiry of the lease

of the New Territories in 1997. Chou En-fai repeated

1972.

this to Lord Thomson in October 1997 therefore

remains the target date for the completion of a new

understanding on retention or withdrawal.

6. Our current line is that there is no question of

a change in the status of Hong Kong in the foreseeable

future. With 24 years in hand this is still realistic.

In

A problem which will increase with time, however,

will be to avoid damaging public discussion of the

future. Hong Kong's prosperity depends on confidence.

This relates not only to business confidence, but also

to the willingness of the Chinese population to work

for the British. The new Governor has made a good

start in developing Hong Kong into a place where people

wish to live and work. But as 1997 approaches they

will inevitably begin to question their future.

the UK the immigration lobby have already expressed

anxiety about the unreal possibility of a massive

inflow from Hong Kong after a takeover by China,

while members of the Tribune Group are considering

an attack on a policy which they claim lulls the

Chinese population of Hong Kong into a sense of false

security in the interests of big business. If public

discussion led to a serious loss of confidence in

Hong Kong the Colony could become difficult to govern.

17.

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