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(ix)

(x)

(xi)

(xii)

courses the Chinese might adopt were:

a) to regard the problem as too difficult and do nothing

until 1997 when they would assume titular responsibility;

b)

to agree to some arrangement which would permit continuing British administration, in return for acceptance of Chinese sovereignty.

But any agreement on their part to extend colonial rule in Hong Kong would be politically sensitive, particularly in relation to other territorial disputes in which they were involved, especially Taiwan.

if we were to contemplate ceding sovereignty over Hong Kong but retain administration we should need a clear statement by the Chinese that Hong Kong would continue for a long period.

we thought that the Portuguese, during talks on establishing diplomatic relations, had reached agreement with the Chinese over Macao on the lines of Chinese sovereignty/Portuguese administration but it had not been made public. We had not so far succeeded in obtaining details from the Portuguese and it was unlikely that the Chinese would tell us anything. Mr Ridley thought we should make a further attempt to find out from the Portuguese exactly what had passed between them and the Chinese. It was agreed however that Macao's case was not analogous to Hong Kong - there was no lease or Order in Council problem.

though the positive benefits overall to Britain of Hong Kong's existence might be arguable, the negative consequences of a Chinese take-over of Hong Kong would be daunting.

(xiii) there seemed nothing we could offer the Chinese within the

wider bilateral or European relationship which might induce them to help over Hong Kong, for example some political gesture, arms sales, transfer of technology.

3.

The Prime Minister's possible visit to China in September 1982 might concentrate the minds of the Chinese on the Hong Kong problem. On the other hand, there was the possibility that her visit would not achieve any progress on the matter. While accepting that his own visit to China in November could not be the right occasion for substantive discussions, the Minister thought he might put down a marker about the Prime Minister. For example, he might take the line with the Chinese that, if the Prime Minister did visit in 1982, expectations would be aroused that there would be some development on the Hong Kong front. In Hong Kong he might take the line, if tackled, that his visit to Peking was purely a fact finding one. However these points could be considered when the briefs for his trip were being prepared.

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