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9.
(e) Not difficult for Britain and China to reach agreement on
Hong Kong if there was real desire for settlement and if
'realistic spirit' prevailed.
(f) Policy of China recovering sovereignty and maintaining
prosperity fully in accordance with wishes of Chinese
people including people of Hong Kong who had confidence in Hong Kong as SAR of China.
We have passed Chinese factual and educative material about
Hong Kong. Designed to show understanding of how Hong Kong works,
and integrated into the international system, and to stress by
implication importance of retaining British link from which its systems derive. At 25 July meeting Governor made presentation on
how Hong Kong 'works'. In August meetings papers handed over to
Chinese expanding in detail on specific aspects of Hong Kong's
structure, viz: legal, monetary, financial, economic.
10.
Chinese propaganda has floated idea of China as autonomous
regime under Chinese constitution. Most authoritative and up-to-date
outline of Chinese plan given by Yao Guang in talks on 25 July. Includes following points:
(a) Hong Kong to become special administrative region of
China.
(b) Government drawn from local people of Hong Kong. (c) Hong Kong's economy, way of life and basic freedom to be
'protected', and laws 'basically unchanged'. Would be an
independent covertible currency and 'existing external
relations in the economic and cultural fields' would be
maintained.
11. Most people in Hong Kong highly sceptical of Chinese formula: China's recent turbulent history and past record. Hong Kong people looking for guarantees against Chinese interference.General
assurances not enough.
12. Essential to carry people of Hong Kong with us. Close consultation EXCO. Their need to show they represent interests of Hong Kong. Negotiation bilateral in theory, triangular in practice.
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