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4. The paper considers in detail what such an arrangement might involve. The view is that, provided agreement could be reached with the Chinese, there would be no legal or other objections to a system in which British jurisdiction continued after acknowledgement of Chinese sovereignty. The implications for such areas as the constitution, defence, finance and citizenship
are discussed in the various annexes.
5. While I am sure there must be no illusions that the negotiation of such a package would be at all easy, I think it represents the best alternative to an evaporation of confidence in Hong Kong, a rundown of the Territory's economy and, by 1997, its eventual
removal from British control. It is the view of the Governor
of Hong Kong that such an arrangement would best meet the interests of the people there. I think that it would also be saleable
in this country both in Parliament and to public opinion. It would indeed represent a very considerable foreign policy success. 6. One point of particular importance is that the maintenance of confidence in Hong Kong's future would discourage people in Hong Kong from trying to leave and come to this country. For this purpose I think it would be important to ensure that any agreement with the Chinese allowed for the continuation of the
status of British Dependent Territories Citizens there. We would not achieve this by a change which involved removing the inhabitants' rights to British Dependent Territories'
passports. Hong Kong people do not of course have the right of
abode in the UK. Provided that they have confidence in their future in the Territory they will not want to leave but any move to deprive them of overall British protection would destroy their faith in the effectiveness of the new arrangement.
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17.
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