SECRET
5
DSR 11C
include the notion of a relinquishment of sovereignty by HMG,
implicitly or explicitly. We do not know that the Chinese
would in fact demand this but it is a logical move for which
we must be prepared.
A)
B)
Reinforcement of existing assurances
The Chinese would talk at a high level to major local
investors in Hong Kong to encourage them to retain and
increase their investments. They would do the same with
selected foreign investors, banks, industrialists and
developers. They would reinforce assurances about
capitalism continuing in Hong Kong well into the next
century and imply that a change of status in 1997 was
unlikely.
#1
(i) Likelihood. Easiest option for Chinese. Harder
as the assurances about no change become firmer.
(ii)
Problems for HMG. None, except:·
(iii) Effect. At best temporary. Such encouragement
and assurances would cause some local Chinese investors
to maintain investments.
Little effect on foreign
Not
investors unless coupled with action on land leases.
sufficient to halt a serious slide of confidence for long,
if at all, because unsupported by either firm and
'bankable' description of conditions under Chinese law,
or assurance of continuance of British jurisdiction.
Declaration by the Chinese that, because treaties unequal,
Hong Kong would revert to China when the
1997 irrelevant;
time was ripe.
(i) Likelihood.
If as a formal statement a slight but
More
significant change in present Chinese position.
difficult than (A) for Chinese however as it implies
continuing British administration beyond 1997. Becomes
progressively more difficult for them the more that is
said about time not being ripe for many years to come.