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FUTURE OF HONG KONG: SPECIAL STUDY FOR THE PRIME MINISTER
1. At her meeting with you on 28 July, the Prime Minister said
that a study on Hong Kong should be prepared to examine solutions to
the problem of the future and the implications of any changes which might emerge from an agreement with China.
2. I now submit this study. It is the product of a great deal of
work completed during the last month in the FCO. The Governor of
Hong Kong and the Ambassador to Peking have been consulted throughout
and the Hong Kong Attorney-General and Political Adviser have also
been involved. In addition contributions have been made by different Whitehall Departments on specialised points which are
covered in the Annexes.
3. The aim of the paper is to provide advice on possible arrangements for the future of Hong Kong, on their implications for HMG and on the tactics to be pursued. It concludes that early action is
necessary to maintain confidence. It suggests that the positions of the UK and Chinese Governments and the interests of the people of Hong Kong could be reconciled by a 'management contract' involving acknowledgement of Chinese sovereignty but only on condition that British administration and control would continue effectively beyond
1997. The possible form of such a contract is considered and the implications of an acknowlegement of Chinese sovereignty are discussed in general terms and in a number of detailed aspects which are dealt
with more fully in the Annexes.
4. The study emphasises that such an arrangement would be difficult
to achieve. If the Prime Minister accepted that it would nevertheless be a reasonable objective, it would probably be right, during her visit to Peking, to aim simply at agreement with the Chinese on the holding of talks to discuss the question further. The Governor of Hong Kong
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