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7. Prospects in Hong Kong.
remarkably buoyant and there is so far no sign of major investment
decisions being held up, there is concern about the prospects after
1997, particularly as Crown land leases in the New Territories are
timed to expire by the end of June 1997. There is also widespread
anxiety over such questions as citizenship. There are increasing
demands for an agreement between Britain and China.
Although the Hong Kong economy remains
8.
A slide in confidence would create major problems for Hong Kong
and HMG. On the other hand, it might also encourage the Chinese to
engage in substantive discussions, because of the economic risk for
them. It is nevertheless unlikely that we would get anything like a
final solution to the problem in such circumstances and there is always
a strong possibility that the Chinese, for political or other reasons,
would not be ready to go beyond general statements on current lines.
9. Possible Options. The contingency paper outlines options which
might provide at least medium-term reassurance. Probably the best
prospect would be an undertaking by the Chinese to give some form of
advance notice (say 15 years) of any change in the Territory's status
(Option D) or statements by both sides that Hong Kong is Chinese
territory temporarily under British administration with no intention
to change this for many years to come (Option C). The latter would
require a change in the treaty status of the Territory and thus a
technical renunciation of sovereignty by HMG. The Chinese would
almost certainly expect a similar price for the first arrangement as
well.
10. Prime Minister's Visit. The Prime Minister has provisionally
earmarked September 1982 for a visit to China. It is important that
/she
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