1
Mr Duff
Mr Mixton,
HONG KONG:
Jiet.
SECRET
&
Reference......
i
こう
So do, and the spousalati a is clorstatair Ate Planncipper. B. 15. uvaly 1982 ? B51.Jo
15uvery
SHOULD WE TRY TO NEGOTIATE NOW?
Muted
1873
1. I recently undertook to produce a short think piece on the relative advantages and disadvantages of attempting now to negotiate with the Chinese People's Republic over Hong Kong's future after 1997. For the record, the view most commonly held in Whitehall (and surely shared in part by the Communist Chinese) is, as I understand it, that the status quo should be maintained with all its uncertainties and no attempt made to determine Hong Kong's future beyond the expiry of the lease until it is estimated that the approach of 1997 is about to have an adverse effect on investment and the passage of time has clarified the internal si tuation in China and the likely attitudes of CPG leaders towards the continued existence of Hong Kong in its present or a similar form. This theory suggests the mid-1980s as a suitable time to begin negotiations. What follows does not, on the whole, dispute this thinking.
2.
Though they do not in my view prevail, there are strong arguments for opening negotiations now and these are worth spelling out: in the lat year following Mao's death and Hua's succession, China has become internally more settled. The radical alternative to the present leadership's moderation has been all but eliminated from national politics with the disgrace of the "Gang of Four", and the broad sweep of China's future is clearer than it has been for many years.
It is arguable that no future administration in Peking is likely to be more inclined than the present (If the latter can be brought to the negotiating table) to take a line favourable to Hong Kong's continued separate existence after 1997. It is also arguable that as 1997 approaches the present Peking Governments attempts at reviving the Chinese economy will be successful to the point of significantly decreasing Hong Kong's value to China and, in consequence, the latter' need for the Colony. If, therefore, the Chinese could be bound now, at a time when the foreign exchange that Hong Kong provides is indispensable to their economy, to an agreement on Hong Kong's future after 1997, the terms gained might be better than they are likely to be if we wait. (Conversely, of course, though less certainly - China has never bayliked at ruthless action by 1997 Hong Kong will have been 20 years more capitalist and this 20 years more assimilable, and China might be less inclined to chew a sharply bitter pill which is only acid now.) Furthermore, the settlement now of the question of Hong Kong's future would take much of the urgency out of profit- making in Hong Kong and permit the Hong Kong Government to raise taxes
And the and spend more on improving the lot of Hong Kong residents. latter would surely expect this: their worries and fears would detach themselves from 1997 and centre on immediate objects, for example their standard of living. (Indeed the net result of an Anglo-Chinese agree- ment about Hong Kong might well be to depress the latter's economy
It would also to a degree that in China's eyes rendered it useless.) render more practicable those very few investment projects now being considered - and I think that the Western section of the MTR is one the capital investment in which cannot easily be amortised within the unexpired portion of the lease.
Ген
3. There are, however, stronger arguments for doing nothing. Perhyas the strongest is that the Chinese have indicated no desire. Indeed the whatsoever to negotiate Hong Kong's longer term future. opposite: it is, in their stated view, a problem to be shelved until conditions are ripe. We can hardly negotiate with a government that
SECRET
/ is