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PLANNING PAPER ON HONG KONG
SUMMARY
1. Hong Kong is a difficult political problem which is likely to become more acute as 1997 approaches. There are both advantages and disadvantages to Britain in the present connection. The British interest requires the continuance of the status quo for some time yet and for an eventual amicable settlement of Hong Kong's future with the Chinese. Changing the present colonial link risks a mass exodus of Chinese/British subjects with humanitarian, if not legal, claims to entry to Britain, There is also the risk of the collapse of one of the world's leading financial centres.
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An important consideration is the interests of the Hong Kong population which is strongly opposed to any significant change in the present colonial status. There is an element of political embarrassment for the CPR in the Colony's existence but it is of great practical value to them. They have publicly declared that Hong Kong is Chinese territory and that the problem will need to be settled when the time is ripe. They are likely to be satisfied with the status quo for the foreseeable future. This could change as a result of political events in China but, in any event, we shall need to discuss the future of the Colony with them well before 1997. This presupposes a well ordered government in China in succession to that of Mao Tse-tung and we cannot determine the best negotiating posture for us until the new government emerges and its character is assessed. This points to a date in the mid-1980s and ive cannot at present speculate on the best options for us. There is no advantage, and real disadvantage, in seeking to engage the CPR in discussion of internal policies in Hong Kong meanwhile.
3. The paper suggests a policy for further improvement in labour conditions and fiscal reform permitting the further development of social security, housing and education. Some aspects of this policy have been suggested by the Governor and some need further discussion with him. On institutions, the paper suggests an enlargement of
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