CONFIDENTIAL

MEETING OF UK COMMANDERS IN CHIEF COMMITTEES: 8 DECEMBER

POINTS TO MAKE ON FUTURE OF HONG KONG

1.

Sino-British talks through diplomatic channels agreed September 1982. Meetings held Peking. Common aim of maintaining Hong Kong's stability and prosperity.

2. Second, more detailed phase of talks began July. Six rounds since.

Last round was on 14/15 November. Described as useful and constructive. Next round 7/8 December. Governor of Hong Kong participating on

British side since July.

3. HMG's aim: to seek settlement acceptable to Parliament, Chinese Government and people of Hong Kong. Their views taken fully into account. In close consultation with Governor and through him with Hong Kong's Executive Council (EXCO).

4. Central issue: to devise package inspiring confidence.

5.

Chinese propaganda floats Hong Kong as Special Administrative

Region (SAR) of China, with considerable autonomy and lifestyle basically unchanged.

6. Most Hong Kong people and investors sceptical of SAR idea. Evidence suggests details rudimentary and basis for confidence not grasped by Chinese. Investors need effective guarantees against Chinese interference. This at present provided by British administration.

7. HMG does not obtain revenue from Hong Kong, nor have we colonialist aspirations. Seeking best possible deal for Hong Kong.

Hong Kong Department

2 December 1983

AT

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