TNAG-0041-FCO40-77-Future-Sovereignty-of-Hong-Kong-Defence-Review-Working-Party-1967 — Page 91

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(b) A permanent settlement which placed Hong Kong in a position similar to that of Macau would be unnacceptable to us (though advantageous to the Chinese) in that it would leave us with responsibility for governing but

without the means of discharging it. However, as an interim step towards an orderly withdrawal, there might be advantage in some form of Anglo-Chinese dual control which might preserve our commercial and financial

interests in Hong Kong.

(c) The report should seek to assess the length of the shadow cast on

business confidence in Hong Kong by the impending end of the lease of the

New Territories in 1997. It had been suggested that investment in

Hong Kong would dry up by about fifteen years before this date.

(a) We held considerable sterling balances for Hong Kong, a large part of

them constituting backing for the Hong Kong dollar, which was issued by a non-Government bank in Hong Kong. In favourable circumstances, this might

give us some bargaining counter in negotiating about the ending of the lease

of the New Territories.

(e) The report should also take account of the possibility, unlikely though

that we might negotiate to remain in Hong Kong on satisfactory terms.

it was,

(f) The Governor of Hong Kong (Sir David Trench) had just arrived in this

country for leave and consultations. The Commonwealth Office would consult

with the Governor in preparing the first draft of a report and, if available,

he might be invited to join the Working Party when a draft was discussed.

Summing up, THE CHAIRMAN said that the outline which the Commonwealth

Office had drafted would be revised by the Secretariat to take account of

the discussion, and the revised version would be annexed to the minutes of

the Meeting, indicating which Department should take the lead in preparing a first draft of each section of the report. He stressed the need for

limiting knowledge of the study to as few people as possible;

the papers would receive a special circulation and not the normal circulation for

papers of the Defence Review Working Party.

The Working Party -

(2)

Invited the members of the Working Party to prepare draft

sections for a long-term study of Hong Kong, as indicated in the outline annexed to these minutes.

Cabinet Office, S.W.1.

27th June 1967

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