CONFIDENTIAL

in Hong Kong before or on 30 June 1997 would be able to get

British passports; children born on 1 July 1997 and thereafter

would not.

?

12. Mr Matsunaga asked about the clause in the agreement

relating to Chinese responsibility for Hong Kong's defence

and diplomatic relations. Would this allow Chinese troops to

be stationed in Hong Kong? Mr Luce said the wording of the

agreement was necessarily imprecise on this point. There would certainly be no British defence commitment after 1997. Equally,

in the years before 1997, the UK would be solely responsible

for the defence on Hong Kong. Deng had made some comments in

May about the stationing of Chinese troops in Hong Kong. There

was nothing in the agreement to prevent this happening. But

the agreement clearly stated that the maintenance of law and

order was a matter for the new Hong Kong government.

13. Mr Matsunaga asked whether the Head of the new Hong Kong government would be elected or nominated after consultations.

Mr Luce said that this point had deliberately been left open

in the agreement, which said that "the Chief Executive will be appointed by the Central People's Government on the basis of

the results of elections or consultations to be held locally".

The British Government was anxious to see the development of

representative insitutions in Hong Kong which would strengthen

Hong Kong's autonomy after

1997. But the British Government

did not wish to commit Hong Kong at this stage to a precise system for the determination of Hong Kong's leadership after 1997. This should be left to the people of Hong Kong. It

would be for them to decide whether or not they wanted to appoint the Chief Executive through direct election.

would be able to

14. Mr Matsunaga asked whether Hong Kong negotiate its own air service agreements. At present, Taiwanese

and ROK airliners used Hong Kong airport and made a not insig-

nificant contribution to Hong Kong's economy. Could this con-

tinue after 1997? Mr Luce said that air services had been one

of the last issues to be settled. The outcome had been very

CONFIDENTIAL

/satisfactory

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