CONFIDENTIAL

appointed members of Legco up to 1995.)

4. Hong Kong Chinese stayers (& expatriates who wish to

remain or do business in the SAR) are likely progressively

to seek to accommodate what they perceive as the wishes of

Peking and to be influenced by those whom they believe will

become the SAR authorities.

5. The efficiency of the Hong Kong Government machine is

likely to diminish.

6. So long as HMG retains the will to remain in Hong Kong,

it must ensure that its Governor retains the power to

preserve internal order. But what interest has HMG in

exercising through the Governor the other aspects of

government?

6A. Th ir are likely to be suspicious of any change

in the co

ent Executive structure of the HKG.

moves in the direction of the Basic Law.

?Even if it

FB5AAR/2

CONFIDENTIAL

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