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10.
Until recently the Chinese gave the impression that they
were in no hurry over Hong Kong. They appeared to think that
the problem of the future could wait until they were ready to
deal with it and that in the meantime general assurances of
Chinese benevolence were sufficient to maintain confidence. British
explanations of the problem combined with reports from their own
sources in Hong Kong seem to have convinced them that early action
is required. Much thought is clearly being given to the problem
and a stream of prominent Hong Kong Chinese have been invited to
Peking to be sounded as to their views on future arrangements.
It is almost certain that these visitors from Hong Kong have not
warned the Chinese leaders explicitly that future confidence in
Hong Kong relies upon the continuation of the British connexion.
11.
The conclusions the Chinese had apparently reached were
put by Deng Xiaoping to Mr Edward Heath in April. They involve
the designation of Hong Kong as a Special Administrative Region
within China, but with a large measure of autonomy. Its position
as a free port and as a commercial and financial centre would
be preserved by retaining its 'systems' (of administration, law
and currency etc.) largely intact. British civil servants and
other foreign experts might be employed on contract. But there
would be no British administration as such. In short, the Chinese
appear to believe that they can oversee the local running of
Hong Kong without losing the economic and other benefits which
they now derive from the territory. The Chinese position is
discussed in more detail in a JIC paper that is being submitted
separately.
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