SECRET
10.
obstacle, and that something will have to be done about it fairly soon. Given the practical problems which it poses, Chinese protestations of goodwill will
not be enough to forestall an erosion of business confidence from the early to mid-1980s onwards; (c) any solution will have to be acceptable to the
Chinese and, in our view, will have to be consistent with the Chinese position on Hong Kong (which conveniently leaves their options open). We are examining various possibilities. We will certainly
study Mr Wyatt's ideas but we doubt whether the Chinese
would agree to a formal extension of the lease for a specific number of years, even in return for the
renunciation of British sovereignty over the whole of Hong Kong. In any case, the renunciation of sovereignty would have very serious legal and other implications, particularly for confidence in Hong Kong. It is not something we could contemplate at this stage; (d) Anglo/Chinese relations are now excellent, and the
atmosphere in Peking is certainly more conducive
to a frank discussion about the future of Hong Kong than it has been for many years. We agree that action will need to be taken before too long. But the timing, as well as the content of any approach will have to be very carefully judged.
FED concur. In order to keep its length to reasonable proportions, I have confined this submission to the main point raised by Mr Wyatt. Briefing on the other matters mentioned in the last page of the letter (trade with China etc) will be provided separately if the Secretary of State so wishes.
11.
Since drafting the above I have seen Lord Goronwy-Roberts' comments in Mr Doherty's minute of 26 January. I hope that the Minister of State will agree that our advice is in line with his views.
29 January 1979
Copies to:
PS/PUS
Branderen
R JT McLaren
Hong Kong and General Department
Mr Cortazzi o r
Mr Rushford, Legal Advisers
- 4
Mr Samuel, FED
SECRET