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7. Our aim is to seek a settlement acceptable to Britain, China and people of Hong Kong. Their views are being taken fully into account. They are made known to us and the Governor through many channels. We are in close consultation, through the Governor, with
Hong Kong's Executive Council (EXCO). As part of the continuing
process of consultation the Governor and Unofficial members of the
Council visited London for discussions with Ministers in July and October. Mr Luce visited Hong Kong from 24-28 September.
8. Chinese propaganda has floated the idea of Hong Kong coming within the Chinese state while enjoying considerable autonomy and functioning essentially as it does now. In the talks with us they have taken a similar line. Their main points are:
(a) Hong Kong would become a Special Administrative Region of China under Article 31 of the Chinese Constitution.
(b) The Government would be drawn from the local people of Hong
Kong..
(c). The economy and basic freedoms would be protected and the laws would be basically unchanged. There would be an independent convertible currency and existing external relations in the economic
and cultural fields would be maintained.
9.
Although
Most people in Hong Kong are sceptical of this idea. it is superficially attractive, it lacks the key ingredient for confidence (ie an insulator against Chinese interference in Hong Kong which at present is provided by the British administrative link). The evidence suggests that the Chinese have not thought through most of the detailed issues involved. They appear to assume that by saying eg that Hong Kong will continue to be a financial/commercial centre or that the Hong Kong dollar will continue to be internationally traded, this will just happen.
10.
We have sought to educate the Chinese about the basis for confidence and the importance of the continuity of prevailing systems. We have concentrated on Hong Kong's position as a
financial/commercial centre, on the role of the Hong Kong dollar and
on the importance of a stable legal system.
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