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PM/82/74 RECEIVED IN REGISTRY NO.
/82/74
PRIME MINISTER
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Future of Hong Kong: Special Study
See 163
1. At your meeting on 28 July you asked that a study should be
prepared on the future of Hong Kong to examine possible solutions
to the problem and the implications of changes which might result
from an agreement with the Chinese.
2. I now attach a paper which has been prepared under the
supervision of John Belstead. A number of Departments have been consulted at official level in preparing the detailed aspects which are covered in the Annexes, but the views set out and the
recommendations are the responsibility of the FCO alone. The
Governor of Hong Kong and the Ambassador to Peking have been consulted throughout.
3. The paper argues that while it will not be easy to reconcile
the divergent positions of the British and Chinese Governments
early action is necessary to prevent a slide in confidence in
Hong Kong. It examines a number of options and concludes that the
likeliest way of reconciling our position and that of the Chinese, while meeting the interests of the people of Hong Kong as a whole, would be some form of 'management contract'. It would be
necessary to ensure that any such arrangement provided very firm
guarantees for the continuation of British administration beyond
1997. Only on that basis could any acknowledgement of Chinese sovereignty be considered.
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