CONFIDENTIAL
DISCUSSION PAPER ON TRANSFER OF ASSETS FROM HKG TO SARG
Problem
The Chinese are unlikely to accept direct transfer of
HKG assets to the SARG.
1.
Recommendation
2.
That a fuller paper on this subject be prepared for discussion with HKG, Peking and UKREP JLG.
Background
The JD and Basic Law
3.
The JD is ambiguous on whether the SAR has to be
established on 1 July 1997. The English version states that
"...the People's Republic of China shall, upon the resumption
of the exercise of sovereignty over Hong Kong on 1 July 1997,
establish the Hong Kong Special Administrative Region...".
The Chinese version of this sentence is, however, more
conclusive in requiring the PRC to establish the SAR on 1 July
1997. The Decision of the National People's Congress on the Establishment of the Hong Kong Special Administrative Region adopted on 4 April 1990 provides that the SAR "is to be
established as of 1 July 1997".
Discussions with the Chinese
4. It is clear from statements made by the Chinese in the JLG
and during the negotiations on the airport that they do not
see the SARG as the direct successor to the HKG. Their
position is that upon the end of British sovereignty, the HKG
will cease to exist and the PRC will then create the SAR and
the SARG. It follows from this that in the Chinese view, the
assets, rights and obligations of the HKG should, upon
assets.paper/MONEY/bp
CONFIDENTIAL