CONFIDENTIAL

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3. The right of land utilization of premises the N.T. will

end in 1997. Will people be required to pay premiums when CHINA recovers sovereignty?

4. What will CHINA do if the British do not surrender the

sovereignty of Hong Kong ?

X

X X

1. China shall recover the soverignty of Hong Kong. By 1997, Hong Kong will be ruled by the people of Hong Kong, flying the Five-star" Flag (the national flag of the People's Republic of CHINA).

2.

After recovering the sovereignty, CHINA will not send any person (s) and troops to Hong Kong.

3. The elite and capable who have been in Hong Kong can

go on attending to the local affairs.

4. Hong Kong currency will remain unchanged.

The Hong Kong

and Shanghai Banking Corporation and the Chartered Bank Ltd. will remain as they are. The assets owned by the People of Hong Kong will remain untouched. Whether or not further

premiums would have to be paid or adjusted (referring to premises) would be decided among the People of Hong Kong.

5. Detailed conditions governing the recovery of sovereignty would not be released in well-defined terms until two

years from now.

6. Taiwan, Hong Kong & Macau would be demarcated as SAR*5,

where the same policies of administration will be

implemented.

It has been agreed and decided by both CHINA and Britain that

the Government of Hong Kong has to be responsible for the

prosperity and stability of Hong Kong.

7.

CONFIDENTIAL

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