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with the Chinese;
The Chinese reaction. On the assumption that the present regime continues in Peking, all the signs are that they would react strongly to, and threaten to overturn in 1997, a decision to increase the number of directly elected seats in
LegCo above that provided for in the Basic Law. They may well interpret our attachment to continuity as an implied
assurance that we would not change the present arrangement without their agreement. The Chinese would see unilateral action as an attempt to set up local institutions which would frustrate a smooth resumption of Chinese control in 1997. It would thus touch a very sensitive nerve. A strongly negative Chinese reaction could spread into other areas (for example cooperation on the airport and in the Joint Liaison Group) and would affect business confidence in
Hong Kong.
The governability of Hong Kong. LegCo's powers and the fact that the Hong Kong Government does not have its own party in LegCo mean that the Government has to build coalitions in LegCo to support its policies and obtain funds. If elected members became the majority in the final two years of British rule, they could, if they chose, bring
the government of Hong Kong to a halt. This would also have major implications for confidence, within Hong Kong and
among international bankers and credit agencies, and hence
political and possibly financial consequences for HMG.
(ii) Other Convergence Issues
12.
The number of directly elected seats is not the only
requirement laid down in the Basic Law for the 1997 LegCo.
The Chinese maintain that if the last LegCo elected before
July 1997 is to continue as the first Legco of the Special
Administrative Region, other requirements will also have to
be met. The most difficult of these is the stipulation that no more than 20% of the LegCo membership in 1997 should be made up of non-Chinese nationals, or those with a right of abode outside Hong Kong. There is no possibility of
ensuring that this requirement is met on the basis of a
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