Mr J A Stewart OBE
SECRET UK EYES A
2
22 December 1977
Taiwan
that the Chinese have already recognised the need to make reassuring noises.
Suggested Outline
I offer below some more detailed preliminary thoughts on the outline of the paper,
which could serve, if you agree, as the agenda for our discussion on 6 January.
1 The paper would open with a background section which would cover the question
of the lease as well as the general themes in paras 2 and 3 of the 1973 paper.
2 The next section on present Chinese policy requires considerable recasting and shortening. The 1973 paper was dominated by the discussion of a possible
Chinese representative in Hong Kong. This has been relatively dormant since
Sir A Douglas Home turned down the last formal Chinese request. It may be
worth discussing the present Chinese attitude to this question in the light of their failure to press their proposal. Conomic
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activity by Cums
3 The discussion of reasons for present Chinese policy would be on broadly
similar lines to paras 8-14 of the 1973 paper. I think however that some
re-examination is called for of the political and economic effects on China of an attempt to incorporate Hong Kong within the People's Republic (para 10), and of the consequences for China's image in the rest of the world (para 14).
4 China's future policy in relation to Hong Kong seems worth a section on
its own.
It should cover the implications of the recent changes of leadership,
the evolution of China's public attitudes to the approaching end of the lease in
the New Territories; it might also refer to the implications for Hong Kong of
a possible settlement between China and the United States of the Taiwan issue,
the importance of China's desire to obtain western technology, and the continuing
importance of the economic benefits which China will derive from Hong Kong; and
in summing up all the foregoing it should examine the implications for us of
Chinese insistence that they will deal with Hong Kong in their own good time.
5
I should like to add to the individual possible threats to Hong Kong discussed
in paras 19-23 the possibility of a local disturbance occurring in Hong Kong
which was completely non-Communist in origin. If the recent disaffection in
Hong Kong Police had got out of hand we should have found ourselves in a very
difficult security situation, which might have obliged the Chinese to take
policy decisions which they clearly prefer to avoid. A second additional
topic which may merit attention in this section is the extent to which the
developing economic links between China and Hong Kong enable the Chinese to put
pressure on Hong Kong Government policy. Otherwise, I would propose to keep