CONFIDENTIAL

4.

We have no standing in the drafting of Basic Law, and

the Chinese are very sensitive to any suggestion that we can dictate policies for the SAR, which will be a part of the PRC

after 1 July 1997. We hope however that we will be able to

influence the drafting process through informal contacts. The

crucial aspects for us are that the Basic Law accurately reflect the agreement (and not be much shorter) and that in

those areas where it fills in details, such as government

structure, it does not run against Our own plans for Hong Kong's constitutional development.

5.

There has been some public controversy

some public controversy over whether the Basic Law itself should be interpreted by the Chinese National People's Congress or by the Courts in Hong Kong. The Joint Declaration is silent on this point. The Chinese response has

been confused. While asserting the supremacy of the NPC, which will pass

the Basic Law, they have suggested that there may be

some scope for interpretation by the Hong Kong courts.

6.

LegCo and

s ome

District Boards have expressed an

interest in debating the Basic Law. Although it is a subject

outside the remit of the HKG, and the Chief Secretary has made

this clear, if there is strong pressure to discuss the subject, it may be impossible to

to prevent them doing so. The HKG would

of course have to make clear in any such debates that the view

of the HKG is that the drafting of the Basic Law is a matter

for the Chinese Government.

CONFIDENTIAL

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