CONFIDENTIAL
PRIME MINISTER'S VISIT TO CHINA AND HONG KONG : 18-21 DECEMBER HONG KONG
BRIEF NO 2: THE FUTURE OF HONG KONG
BACKGROUND
CONCERNS FELT IN HONG KONG
A. UMELCO
1. UMELCO set out their main concerns in their statement of 29 November (Annex A) and in Sir S Y Chung's speaking note for the meeting with the Prime Minister on 5 December (Annex B). They will meet the Prime Minister only informally, at lunch on 20 December. The points to make go over the ground in general terms, but it is expected that UMELCO will revert to matters of detail on that occasion. The most detailed discussion will come when the Secretary of State sees EXCO on the afternoon of 20 December, during the Prime Minister's district visit. The Prime Minister's later meeting with EXCO will last only 20 minutes, and will be largely formal.
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2. Exco has not yet formally discussed the Hong Kong Bill, although members are aware of its general form. Exco will be given an opportunity to discuss the draft Bill shortly. Sir S Y CHung is not entirely happy with the procedure of dealing with the termination of sovereignty by a clause in the Bill, rather than by a clause enabling a subsequent Order in Council. Exco as a whole were unable to reach agreement on advice to offer on this point.
B.
GENERAL
3. The general response in Hong Kong to the publication of the draft agreement was one of acceptance and some relief. The degree of detail contained in Annex I caused some surprise. Business and stock market sentiment immediately reacted favourably.
4. Hong Kong's reaction was channelled through the Assessment Office established to collect and analyse local opinions. Annex C summarises the reports of the Assessment Office and the independent Team of Monitors. Both reports concluded that the agreement was acceptable to Hong Kong, but noted the "agenda" of concerns and qualifications. The main concerns identified include:
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