if Hong Kong is to risk confrontation it should be on issues where major Hong Kong interests are involved. It is questionable whether such is the case here;
confrontation a year after serving notice might prejudice wider negotiations which could be taking place at the time;
termination of services (if it comes to that) would not be in the interest of Hong Kong's efforts to develop its role as a gateway into China. It would be unlikely to be supported by public opinion generally and the travelling public in particular;
in the last resort, the Chinese MFA might choose to regard the issue as one of sovereignty.
The FCO's view on the wider implications of giving notice of termination (which Hong Kong understands has Ministers' approval) is:
(a)
(b)
the balance of advantage lies in giving notice of termination of the CMU on regional routes;
negotiations on Hong Kong's future, would not be thereby prejudiced for the following reasons:
(i)
(ii)
despite probable CAAC brinkmanship, it is unlikely that services would actually cease: both parties have a substantial interest in maintaining and expanding them;
the Chinese MFA are unlikely to see this as a question of sovereignty. They would be more likely to see it as a practical problem to be settled in a practical way; and
(iii) if there were to be an extended argument,
its effects on wider negotiations would be limited since only a small part of the overall economic relationship between Hong Kong and China would be involved;
(iv)
in any case, HMG could back-pedal and get a less satisfactory agreement than we now seeking;
BUT
SECRET