MAY.02 '86 11:23 GMT HO 2 LUNAR HOUSE

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16. Our second principle is that we should do all we can to ensure that people settled in Hong Kong will continue to have the right of abode there. No form of British nationality can guarantee this after 1997, neither British citizenship nor British Overseas citizenship. It can only be secured by the Agreement with the Chinese which makes just such a provision, The Agreement specifically guarantees rights of abode in Hong Kong for all non-ethnic Chinese who have made it their place of permanent residence or have the right of abode only in Hong Kong. It is a formal international Agreement binding in international law and registered with the United Nations, It also states that its provisions will be written into a basic law governing the Hong Kong Special Administrative Region. The future of the non-ethnic Chinese community in Hong Kong will therefore be secured as a matter of law.

17. We recognize that people are concerned about what might be the position of their great grandchildren and of future generations. Under the provisions of the British Nationality Act 1981, neither British citizenship nor British Overseas citizenship can be transferred to more than two generations born out of this country. Of course we cannot sensibly speculate about what may be the position in the middle of the 21st century, but our present view is that by then it would be right for those who will have been living in this area for so many years to seek Chinese nationality. The Chinese Government have confirmed that those who are not Chinese but who meet the legal requirements may apply for Chinese nationality and that such cases would be dealt with by the appropriate authorities, Of course, we cannot expect the Chinese any more than any other Government to give firm and blanket undertakings so far in advance, but we intend to explore this matter further with the Chinese Government during the course of our continuing detailed discussions with them in the years leading up to 1997.

18. There are those who argue that given the circumstances of Hong Kong it would nevertheless be right to grant British citizenship with the right of abode in this country to people who are not ethnically Chinese in case at any time circumstances were to change and they had to leave. Of course we have to make judgements now in the light of our understanding of the present circumstances, and if circumstances were substantially to change there would no doubt need to be a good deal of reconsideration and readjustment. But

I recognize the ethnic minorities concern about the future and that is why I have thought it right to make clear, I repeat again today, that if any British national were at any time to come under pressure to leave Hong Kong, we would expect the Government of the day to consider sympathetically their admission to the United Kingdom on a case by case basis. But it would not be sensible to go into the next 11 years planning for the worst, and we have no reason at all to do so,

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