CONFIDENTIAL

BACKGROUND NOTE

THE FUTURE OF HONG KONG

1. The Secretary of State raised the subject of confidence in the

future of Hong Kong during talks with Foreign Minister Huang Hua

and Party Vice-Chairman Deng Xiaoping. Both firmly reiterated past

assurances, first made by Deng to the Governor of Hong Kong in Peking

in 1979, that investors in Hong Kong should 'put their hearts at ease'

[Not to be revealed] The Chinese Government has made it clear

that it is not yet ready to discuss the long-term future of Hong Kong.

Any attempt to do so would annoy them and be likely to be counter-

productive. This position cannot, however, be made public since it

would affect confidence in the Territory.

2.

VIETNAMESE REFUGEES

3. There are now around 17,000 Vietnamese refugees in Hong Kong

waiting resettlement. The United Kingdom agreed at Geneva in 1979

to accept 10,000 such refugees in addition to the 1,000 accepted

earlier. About 9,000 of these resettlement places have been filled.

Signs are that the balance will take time to fill because of a

reluctance by the refugees to come to Britain. [Not to be revealed]

Nevertheless, there is feeling in Hong Kong that there should be a

further United Kingdom quota which they see as essential if other

recipient countries, especially the United States, are to be

persuaded to continue off-take of refugees. There are, however,

practical difficulties in the resettlement programme as regards

housing and employment in the United Kingdom. The question of a

further quota will soon have to be considered, but will meet with much

resistance, especially from the Home Office and No 10.

CONFIDENTIAL

/NATIONALITY BILL

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