CONFIDENTIAL

(B)

THE AGREEMENT

5.

In the Government's view the agreement

one.

i s

a

remarkable

The Government is confident that the agreement provides the necessary assurances about Hong Kong's future which will

allow the territory to continue to flourish, and to maintain its unique rôle in the world as a major trading and financial

centre. It provides a framework in which Hong Kong as

an SAR

of the People's Republic of China will be able to preserve

its unique economic system and way of life after 1 July 1997.

It enables the people of Hong Kong to plan for the future with a high degree of certainty and confidence about what

that future will hold.

6.

Some noble Lords have raised the question of how we can

be confident that the agreement will be implemented by both

sides. There can be no such thing as certainty about the future in this world. But as I indicated in my opening

speech there are the strongest reasons to believe that the agreement will be observed. National prestige is involved in upholding an agreement recognised by both sides as legally binding.

National self-interest is served by the

preservation of Hong Kong's flourishing economy. China's national objective of eventual reunification is intimately

associated with the success of this agreement.

CONFIDENTIAL

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