CONFIDENTIAL
SECTION VII: THREATS TO AND OPPORTUNITIES FOR BRITISH INTERESTS
THREATS
17. (i) Hong Kong
A break-down in the talks on Hong Kong's future and the consequent collapse of confidence in the Territory would gravely damage every other aspect of Sino-British relations.
(ii) Internal Political
be
China's internal stability cannot assured.
New tensions
may be building up which might pose an eventual threat
to the leadership.
(iii)
External Political
The Soviet leadership will continue to express concern over the improving relations between Britain and other Western Governments and the Chinese, particularly in the
field of defence sales.
(iv)
Economic
In common with all China's trading partners, the UK could face problems in trading with China if the Chinese over-borrow, cannot export enough, want us to take more sensitive items under quota than we are ready to con- template, or are held back by inefficiencies and short- comings in the infrastructure.
OPPORTUNITIES
18. I.
Hong Kong
Present good political relations between Britain and China, and the recent consolidation in power of a pragmatic leadership, provide a good opportunity to negotiate a mutually satisfactory arrangement for the future of Hong
Kong.
CONFIDENTIAL
/II.