CONFIDENTIAL
4. In September 1982 agreement was reached during the Prime Minister's visit to Peking to enter into negotiations with
this purpose. For ourselves of course it was clear from the start that any agreement must be one we could honourably
commend to the people of Hong Kong and to Parliament, and one
which they would find acceptable.
In the early stages of the talks we explored whether it might be possible, in the interest of minimum change, to secure agreement to continued British administration in Hong Kong after 1997, on the basis of our recognition of China's sovereignty over the whole territory. It became clear however that a solution along these lines would not be acceptable to the Chinese Government. We concluded that a breakdown in the talks, with all the uncertainties that this would have created, would not serve the best interests of the
people of Hong Kong. Indeed it would have had very serious consequences for prosperity and stability. We therefore decided, with the support of the Governor and the Executive Council in Hong Kong, to explore Chinese ideas for Hong Kong as a Special Administrative Region of the People's Republic of China, enjoying a high degree of autonomy and the maximum possible degree of continuity in its systems and way of life.
CONFIDENTIAL