CONFIDENTIAL - 2 -

decision to establish two separate citizenships, and

to place CUKC in Hong Kong in the second, could create

serious strains in UK/Hong Kong relations.

If a

decision is taken to go ahead, very careful consider-

ation will need to be given to how best to limit the

damage. It will be essential to consult the Hong Kong

Government about the details of the new scheme before

it is finalised."

C

CONFIDENTIAL

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