everyone assumes all will be well.
THIS IS A COPY
THE ORIGINAL HAS BEEN CLOSED FOR
40 YEARS UNDER FOI EXEMPTION No. 27 (...)...
14.
To extricate ourselves and the Chinese from this situation requires the Chinese to agree, and agree soon, either to U.K. legislation to escape from the terminal date in the Order-in-Council and so prolong the powers of the existing administration, or alternatively to come up with new arrangements that would command confidence. The economic arguments in favour of them doing so appear overwhelming, but I doubt if it is going to be easy.
This requires us to proceed
with extreme caution, as a push at the wrong time could get us the wrong answer. Moreover we should at least condition ourselves to the possibility of having to pay a considerable price illogical though this may seem.
15.
in 1979 the Chinese rejected a proposal that we should amend the Order-in-Council as 'unnecessary and inappropriate'. Since then we have been carefully nudging through both official and unofficial channels, and the Chinese position has moved. After previously maintaining that following the general assurances given no problem existed, they now accept that one does exist which must be solved soon, and they say that the principles of a solution exist and that it only remains to work out concrete measures. The principles appear to be:-
(a) Chinese sovereignty must be safeguarded;
(b) Hong Kong's prosperity must be maintained, and it is accepted that this is based on it continuing as a free purt and an international commercial and financial centre;
(c)