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assets of the HKG. They have also asked for a full list of
HKG's assets (these assets range from liquid assets such as
the Exchange Fund and the Reserves to fixed assets such as
hospitals and schools, and also all other items owned by the HKG). We have so far declined to produce such a list on grounds of impractibility.
The Legal Position
It
5.
The customary international law position is that assets which are the physical and fiscal property of an extinct or totally absorbed state are assumed by the absorbing state. is for the successor state to determine whether the property becomes vested in the State itself or in a component part of
the state such as a territorial subdivision. Although Hong Kong is not a state the Chinese may argue by analogy that this requires that all physical property which makes up Hong Kong,
Mont and its financial assets, be passed to them on 30 June 1997 and
then A
that it is for the
assets.
PRC to decide to endow the SAR with these
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6.
If the Chinese adopt this position, as seems likely, and
if we have reason to believe that the SARG would not inherit
take the following Ime. We could
HKG's assets, we could maintain that Hong Kong is a unique
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case governed by the JD and that the JD contains no
requirement for HKG assets to be passed to the PRC and that
this is therefore a matter to be resolved between the two
sides. The logical extension of this argument is that in the d
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absence of an agreement, we reserved the right to transfer
HKG's financial assets to HMG before or on 30 June 1997, and then to grant them direct to the SARG. This approach would of course be wholly unacceptable to the Chinese, and probably also to the public in Hong Kong. It is however a position which might encourage the Chinese to negotiate a satisfactory
very difpunkt written agreement on transfer of assets. to tab of
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