Redacted under FOI exemption section 27(1).
SECRET
UK EYES A
LOCSEN
should become very much more heavily involved in dealing with the problem and thereby help to relieve the burden on the HKG.
16.
Throughout 1990 and 1991 Sino-UK relations improved very gradually as high level, including Ministerial, visits resumed and [elements of the sanctions fell away. The unexpected low level of applications under the British Nationality Scheme suggested a return of confidence [Refer here to outcome of discussions with PRC on the new airport and related projects when it is known]. Moreover, the general economic and business climate in Hong Kong is currently much better than many would have dared to predict in mid-1989. But the underlying problems and difficulties of the transitional period to 1997 are more likely to be dormant than dead. The security situation is highly dependent on unpredictable developments in China. Many people in Hong Kong realise that the Joint Declaration must remain the basis of their future. But by no means all the confidence in that future which was so badly shaken in 1989 has returned and to that extent the potential, in so volatile a place as Hong Kong, for things to go messily wrong between now and 1997 is greater than it was.
Interests of the Three Governments Concerned.
17. In the light of all these developments since CDS 7/87 was written and approved, it is necessary to review the political interests, as set out in that document, of the three Governments concerned.
Chinese Perceptions and Intentions.
Page 7 of 47 pages
LOCSEN
UK EYES A
SECRET