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to remain in Hong Kong.

Contingency legislation has been drafted to

require the carriage of identity cards and make it illegal to employ

anyone without an identity card. . Proposals have been kept secret under

the code name 'Operation Champion'.

6. New measures could encourage a black market in identity cards and

increase corruption and exploitation of illegal immigrants. Further

strain would be placed on Police.. Parliamentary interest could be

further aroused.

Change of policy will be viewed less critically if

Secretary of State can say. that he has raised the problem with the Chinese,

proposing a new joint effort. Success is essential and depends on Chinese

cooperation.

At the very least, they are unlikely to object, although

Huang Hua at this stage may only be able to take note, in which case

follow up through HM Embassy in Peking will be necessary.

Timetable of Future Action

7.

The Governor has told the Chinese that he would like to meet the

Governor of Guangdong Province on 20 October (Mr Blaker has agreed to

this visit) to discuss immigration problems. Legislation would, subject

to this meeting and Ministerial approval, be introduced in Hong Kong on

23 or 24 October. The new measures would come into force 4 to 10 days

later.

(b) LEGAL IMMIGRATION

8.

Legal immigration from China is also a problem. Whereas only 25,000

entered Hong Kong in 1977, over. 70,000 came last year, and at current

levels some 53,000 are expected this year. This is far too high and we

would like to see the figures come down to traditional levels of about

20,000 per year. The Chinese should be able to do this since they

control the number who leave legally. Most who do so are given permits

to visit Hong Kong for long periods but very few return. When immigration

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