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SECRET
I)
Currency and Finance: If the present legal
system were maintained intact and HMG continued
to be responsible for Hong Kong's external
relations, there is no necessary reason why the
same fiscal and monetary policies that have
facilitated the economy's growth performance
and diversification in the past should not be
equally successful in the future. But if
there were any doubts whatsoever about the
management contract, the exchange value of the
Hong Kong dollar would deteriorate as attempts
were made to sell Hong Kong dollars for a
dwindling supply of foreign currencies.
J)
K)
Defence and Internal Security: To ensure
effective control and continuing confidence
the UK would need to retain responsibility for
defence and internal security and the power to
deploy forces there. While there would be no
legal bar to the continued stationing of British
troops the Chinese might have strong objections.
Citizenship and Nationality:
Acknowledgement by
HMG of Chinese sovereignty over Hong Kong might
be thought to imply the relinquishment of any
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