Mr Donald

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RECEIVED IN RESISTRY &C. 51

DECK OFFICER INDEX

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FUTURE OF HONG KONG

1. You will have seen Peking telegram No 22 to Hong Kong describing Song Zhiguang's interview with Reuters as regards the future of Hong Kong. This has now appeared as a Reuters report, without of course identifying Song.

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2. There are two main points in Song's remarks. The first concerns Macao. This is the first clear and certainly public confirmation we have seen that Sino-Portuguese understanding reached during the 1978 negotiations for the establishment of diplomatic relations included recognition of China's sovereignty over Macao. This could be a signal to us that the status quo under Chinese sovereignty is the sort of medium-term solution that awaits Hong Kong and that we should condition our thinking along these lines. But whether this means that any demand for British recognition of sovereignty will be made on this visit is much more doubtful.

3.

It is equally apparent from Song's remarks that the Chinese still regard any change as a long time off. Repeated assurances to investors would, he stressed, be all that the Secretary of State would get from Huang Hua on this subject. It is still possible that Deng Xiaoping may be coaxed into going further but, made on the eve of the visit, Song's statement appears intended to quell any hopes we may have that the Chinese might be prepared to face up to short-term problems now.

4.

You will also have noticed Song's remark, in paragraph 3 of the telegram, that China has never recognised the 'unequal Treaties' pertaining to Hong Kong. This is interesting as have always understood that Chinese condemnation of the Treaties did not amount to absolute non-recogniation. The distinction between acceptance and recognition is, however, a fine one, and it may be that loose interpretation has blurred what Song actually said on this point.

2 April 1981

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PS/Mr Blaker

Mr Davies, FED Mr Daunt, SED

Thank

you

ip

R D Clift

Hong Kong and General Department

We now have the Volagrans

I don't think we need

from beking.

read too much into X. It's close enough to the Vunit honoured formula Artaald

SECRET

3/4

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