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DSR 11C
to enter a dialogue without such a threatening incentive.
Actions to halt a slide in confidence or to respond to a
Chinese initiative
10. The following possible actions are graded in a rough order
of ascending difficulty for the Chinese. An important feature
of most of the proposals is that any action to extent British
administration would
to be credible
le] require amendment or
a,[t
replacement of the 1898 Order in Council providing for and
defining the length of jurisdiction in the New Territories
(Annex B) (which in turn is directly related to the Convention
of Peking 1898 (Annex C)). This would almost certainly
need Chinese agreement or at least their readiness not to
object to the legislation if challenged. The Attorney-General
shares the opinion of our departmental Legal Adviser that any
amendment would need explicitly to make clear the intention
of HMG to administer the New Territories beyond 1997. A
number of the proposals also include the notion of a
relinquishment of sovereignty by HMG. 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) Reinforcement of existing assurances
W
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.
(i) Likelihood.
Easiest option for Chinese.
Harder as
the assurances about no change become firmer.
(ii) Problems for HMG. None, except:
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