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SECRET AND PERSONAL

Enter

(66)

166712

020/393/2

LAST PAPER

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HICK CHoll

RECEIVED IN REGISTRY NO. 51

Sir Edward Loude

FCO

INDEX

مدل

Dear Patie

27 JANJI

FIDER PA

REGISTRY

Action Taken

7103

THE FUTURE OF HONG KONG

In

Donald

BRITISH EMBASSY,

PEKING.

18 December 1980

I have discussed with the Clift

Chift:

We spate.

5/2/6

$2

5/216

1981

1. Thank you for sending me a copy of your letter of 26 November to Murray MacLehose about your talks with the Secretary of State on the future of Hong Kong. I should like, if I may, to make some comments on the question as seen from Peking and in the light of my recent discussions with Murray in Hong Kong.

2.

My first point is that this is almost certainly a very difficult problem for the Chinese. Quite how they see it is a matter for conjecture only, but we have some indications of their concerns. It is politically highly charged, involving une qual treaties and terra irredenta. It cannot be treated in isolation without regard to its effect on the related and larger issue of Taiwan and perhaps also on the whole range of unsettled questions involving what the Chinese see as their territory. However strong the economic arguments, concessions, real or apparent, will be very delicate. Only very senior Chinese leaders can pronounce on the issue with authority and the leaders currently have many other preoccupations. Deng's statement of March 1979, inadequate though it is from our point of view, may well prove hard to expand or modify simply because of its exalted origin. The Chinese do not accept easily, even where they understand, the tight legal framework within which we on our side have to operate. They may well believe that there could be some simpler, less formal, way, without explicit declarations, for dealing with the matter. They may hope, for example, that longer mortgages rather than extended leases, would provide an answer. We do not agree with this but they may be hoping that in some such way they can avoid tackling the issue head on.

3. This is fairly familiar ground. I go over it to make the point that, with the best will in the world, and despite the better information and the increased pressure from their contacts in Hong Kong, the Chinese may be reluctant or unable to make the first move or to come up with something that really bites on our problem. The approaches and the education on possible answers will probably have to come from us.

/4.

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SECRET AND PERSON AL

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