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considerable degree of autonomy but with the implication that
the PRC would not only possess sovereignty but might also
exercise sovereign powers, leaving no roon for the exercise
of such powers by the UK.
A Possible Solution
26. Given the gap between the British and Chinese positions,
the most promising way of reconciling our requirements with
those of the Chinese would be to work for a satisfactory
'management contract', providing for continuity of British
control over the whole territory after 1997, indefinitely or
for a period of years in return for an acknowledgement of
Chinese sovereignty. The negotiation of an agreement of this
kind would be difficult and could be slow. But if it could
be achieved there are very good prospects that it would be
honoured by the Chinese. The Chinese Communists have a
generally good record of sticking to agreements once made;
and an arrangement whereby the PRC obtained British acknowledge-
ment of Chinese sovereignty over Hong Kong without sacrificing
the economic benefits China derives from the territory would
be very much to the Chinese advantage.
Even if, as seems
unlikely in the medium term, there were major changes in the
political balance of the Chinese leadership, there is no
reason why a successor administration should regard an agreement
on these lines as prejudicing China's interests. From the
UK point of view, there would be an agreed basis for the
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/continuation