CONFIDENTIAL

SECRETARY OF STATE'S VISIT TO HONG KONG: 29 MARCH TO 1 APRIL 1981

LINE TO TAKE

1.

The Governor says visit went 'extremely well'. Main

purpose of visit has been to re-assure local people about HMG's

intentions towards the Territory. Appears to have been successful

in this respect. Helpful that visit coincided with public

announcement of Castle Peak 'B1 Power Station order, which

Lord Carrington has presented as firm sign of HMG's commitment

to Hong Kong's stability and prosperity.

Castle Peak order

will also help promote UK trade with Hong Kong.

2.

(Esson)

Main issue raised in Hong Kong was Territory's future after

expiry of New Territories Lease in 1997.

Secretary of State

stressed mutual interest of UK and China in maintaining stability,

and referred to the importance of good relations with China.

3.

Second major issue was British Nationality Bill.

Discussions took place with Officials and Unofficial Members of

the Executive and Legislative Councils about proposed amendments

to Bill. Hong Kong's concern relates directly to fears about

maintenance of British commitment to Hong Kong.

4.

UK overseas student fees not a major issue. Hong Kong

Government's emergency loan scheme had taken much of the heat

out of local feeling.

5.

Secretary of State will wish to report personally on

problem of Vietnamese refugees in Hong Kong.

CONFIDENTIAL

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