Background

(a) The Annual Report

CONFIDENTIAL

3. This is an annual exercise which began in 1985. The last Annual

Report was published in March 1989. It sank without trace in Westminster: no MP has ever referred to it as far as I am aware,

alone sought to debate it. In Hong Kong it generates mild interest.

let

4. Mr Maude has asked that this year's Annual Report should be covered by a letter from the Secretary of State. This would help considerably to give the Report more impact. I am submitting separately today the draft Annual Report and a draft covering

letter.

A

B

C

(b) The Foreign Affairs Committee

5.

We replied to the Foreign Affairs Committee's Report in

December 1989. Although we avoided describing it as an interim

reply, the Committee have chosen to regard it as such. Mr Howell

has written to the Secretary of State asking for a further reply.

6.

Our reply of December 1989 was thin because decisions had not

been taken at that time on nationality or constitutional

development. The Secretary of State subsequently announced

decisions on these matters on 20 December and 16 February

respectively. Detailed arrangements for the 1991 LegCo elections

were announced in Hong Kong on 21 March. Further details of our

nationality proposal will be revealed when the legislation is tabled on 4 April. The Basic Law will also be promulgated on 4 April. As the attached Analysis shows, this has effectively dealt with all the

issues that were left outstanding in our "interim" reply of December

1989.

CONFIDENTIAL

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