4. I WANT TO EMPHASISE THAT THROUGHOUT THE TALKS WE HAVE KEPT IN

CLOSE CONTACT WITH THE GOVERNOR AND WITH MEMBERS OF THE EXECUTIVE

COUNCIL. THROUGH THEM, THROUGH THE LEGISLATIVE COUNCIL, AND THROUGH VISITS TO HONG KONG BY BRITISH MINISTERS (MOST RECENTLY BY MR LUCE),

WE HAVE KEPT IN TOUCH WITH A WIDE RANGE OF OPINION HERE. THE HOPES,

AND ASPIRATIONS OF THE PEOPLE OF HONG KONG HAVE BEEN VERY MUCH IN

OUR MINDS. OUR CHIEF CONCERN HAS BEEN TO PRESERVE THE WAY OF LIFE OF HONG KONG, A WAY OF LIFE WHICH LIES AT THE HEART OF THE TERRITORY'S SUCCESS. WE KNOW THAT THE PRESERVATION OF THAT WAY

OF LIFE DEPENDS UPON CONTINUITY: CONTINUITY IN THE ESSENTIALS OF

THE LEGAL, ECONOMIC, SOCIAL AND ADMINISTRATIVE SYSTEMS: AND MAINTENANCE OF THE FREEDOMS THAT PEOPLE IN HONG KONG NOW ENJOY.

5. 1 SPOKE ABOUT THIS IN A DEBATE IN THE HOUSE OF COMMONS ONLY A

FEW WEEKS AGO. I POINTED OUT THEN THAT CONTINUITY IN HONG KONG IS

AT PRESENT ASSURED BY BRITISH ADMINISTRATION. THE TERMS OF AN

AGREEMENT BETWEEN THE BRITISH AND CHINESE GOVERNMENTS STILL HAVE

TO BE WORKED OUT. BUT IT IS RIGHT FOR ME TO TELL YOU NOW THAT IT WOULD NOT BE REALISTIC TO THINK OF AN AGREEMENT THAT PROVIDES FOR CONTINUED BRITISH ADMINISTRATION IN HONG KONG AFTER 1997. FOR THAT

REASON, WE HAVE BEEN CONCENTRATING ON OTHER WAYS OF SECURING THE ASSURANCES NECESSARY FOR THE CONTINUITY OF HONG KONG'S STABILITY,

PROSPERITY AND WAY OF LIFE.

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6. I BELIEVE THERE IS A BASIS ON WHICH THIS CAN BE ACHIEVED. THE

CHINESE GOVERNMENT HAVE MADE IT CLEAR PUBLICLY THAT THEY RECOGNISE

THE SPECIAL CIRCUMSTANCES OF HONG KONG, AND THAT THEY WANT ITS SOCIAL

AND ECONOMIC SYSTEMS AND LIFESTYLE IN MANY WAYS SO DIFFERENT FROM

THOSE OF MAINLAND CHINA TO REMAIN UNCHANGED. WE SHARE WITH THE

CHINESE GOVERNMENT THE STRONGEST POSSIBLE COMMON INTEREST IN THAT OBJECTIVE. OUR APPROACH TO THE TALKS HAS, THEREFORE, BEEN TO EXAMINE WITH THE GOVERNMENT OF CHINA HOW IT MIGHT BE POSSIBLE TO ARRIVE AT ARRANGEMENTS THAT WOULD SECURE FOR HONG KONG, AFTER 1997, A HIGH DEGREE OF AUTONOMY UNDER CHINESE SOVEREIGNTY, AND THAT WOULD PRESERVE THE WAY OF LIFE IN HONG KONG, TOGETHER WITH THE ESSENTIALS

OF THE PRESENT SYSTEMS.

7. WITH THIS IN MIND, THE BRITISH GOVERNMENT'S OBJECTIVES ARE CLEAR: A FRAMEWORK OF ARRANGEMENTS THAT WILL PROVIDE FOR THE MAINTENANCE OF HONG KONG AS A FLOURISHING AND DYNAMIC SOCIETY:

AND AN AGREEMENT IN WHICH THESE ARRANGEMENTS WILL BE FORMALLY

RECORDED.

8. I BELIEVE THAT THE BRITISH AND CHINESE GOVERNMENTS SHARE A DESIRE TO SEE THE CONTINUATION IN HONG KONG OF A SOCIETY WHICH ENJOYS ITS OWN ECONOMIC AND SOCIAL SYSTEMS AND DISTINCT WAY OF LIFE, AND WHICH OFFERS A SERVICE TO THE WORLD AS AN INDUSTRIAL, COMMERCIAL AND FINANCIAL CENTRE. AGAINST THAT BACKGROUND, IT IS POSSIBLE TO FORESEE A SITUATION IN WHICH HONG KONG WOULD, AS PART OF CHINA, ENJOY A HIGH DEGREE OF AUTONOMY. IN SUCH A SITUATION, THAT AUTONOMY WOULD EXTEND TO ADMINISTRATION, THE MAKING OF LAWS,

RESTRICTED

FC040/1655

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