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LEARNED FRIEND THE FOREIGN AND COMMONWEALTH SECRETARY UNDERTOOK TO THE FAR EAST LAST MONTH. IN PEKING HE HELD DETAILED AND SERIOUS TALKS WITH CHINESE LEADERS ON ALL ASPECTS OF THE FUTURE OF HONG KONG. HIS AIM WAS TO REVIEW THE COURSE OF THE NEGOTIATIONS WHICH ARE UNDER WAY AT DIPLOMATIC LEVEL, TO SUM UP THE PROGRESS MADE AND TO GIVE THEM A FRESH IMPETUS.

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5. IN HONG KONG MY RT HON AND LEARNED FRIEND HELD DISCUSSIONS WITH THE GOVERNOR AND THE UNOFFICIAL MEMBERS OF THE EXECUTIVE AND LEGISLATIVE COUNCILS, AS WELL AS MEETING REPRESENTATIVES OF VARIOUS STRANDS OF LOCAL OPINION. HE ALSO MADE A PUBLIC

STATEMENT ON THE GOVERNMENT'S APPROACH TO HONG KONG'S FUTURE:

COPIES OF THAT STATEMENT HAVE BEEN DEPOSITED IN THE LIBRARY OF

THE HOUSE.

6. IN THAT STATEMENT THE FOREIGN AND COMMONWEALTH SECRETARY DESCRIBED HIS CLEAR CONCLUSION THAT IT WOULD NOT BE REALISTIC TO

THINK OF AN AGREEMENT THAT PROVIDED FOR CONTINUED BRITISH ADMINISTRATION IN HONG KONG AFTER 1997. EVERY POSSIBILITY HAD BEEN FULLY EXPLORED THAT CONCLUSION WAS REACHED: BUT IT WAS BASED BOTH ON EXPERIENCE IN THE NEGOTIATIONS THEMSELVES AND ON THE REALITY OF THE EXPIRATY OF THE LEASE OVER THE NEW TERRITORIES IN 1997. INSTEAD, WE HAVE SOUGHT TO EXPLORE OTHER WAYS OF SECURING THE ASSURANCES NECESSARY FOR CONTINUITY IN HONG KONG.

7. THERE IS A GOOD BASIS ON WHICH WE CAN BUILD. THE CHINESE GOVERNMENT HAVE MADE IT CLEAR PUBLICLY THAT THEY RECOGNISE THE SPECIAL CIRCUMSTANCES OF HONG KONG AND THEY WANT ITS SOCIAL AND

ECONOMIC SYSTEMS AND LIFESTYLE TO REMAIN UNCHANGED. WE HAVE THEREFORE BEEN EXAMINING 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 OF HONG KONG

TOGETHER WITH THE ESSENTIALS OF THE PRESENT SYSTEMS.

8.

IT IS INDEED POSSIBLE TO FORESEE A SITUATION IN THE FUTURE IN WHICH HONG KONG WOULD, AS PART OF CHINA, ENJOY A HIGH DEGREE OF AUTONOMY WHICH WOULD LAST FOR AT LEAST 50 YEARS FROM 1997. IN SUCH A SITUATION, THAT AUTONOMY WOULD EXTEND TO ADMINISTRATION, THE MAKING OF LAWS, THE MAINTENANCE OF HONG KONG'S SYSTEM OF

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