SECRET

7. THE CHINESE GOVERNMENT'S POSITION IS THAT PERSONS OF CHINESE DESCENT WHO WERE BORN IN HONG KONG, OR WHO HAD A PARENT BORN IN HONG KONG, HAVE ALWAYS HAD AND WILL CONTINUE TO HAVE CHINESE NATIONALITY. HOWEVER, CHINESE NATIONALS WHO WERE BDTCS BY VIRTUE OF A CONNECTION WITH HONG KONG PRIOR TO 1 JULY 1997 MAY CONTINUE TO USE TRAVEL DOCUMENTS (INCLUDING PASSPORTS) ISSUED BY THE UNITED KINGDOM GOVERNMENT.

ENDS.

YOUDE

LIMITED

HD/HKD HD/FED MR BOYD

3

SECRET

COPIES TO:

SIR P CRADOCK (2)

MR BICKFORD, LEGAL ADVISERS MR FITFOOT,

SIR E YOUDE, K195A

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