TNAG-0752-FCO40-956-Future-of-Hong-Kong-1979 — Page 174

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THE ORIGINAL HAS BEEN RETAINED IN THE DEPARTMENT UNDER SECTION 84) OF THE PUBLIC RECORDS ACT 1969

ITEM FOR INCLUSION IN BRIEF NUMBER 4 FOR THE VISIT OF THE PORTUGUESE FOREIGN MINISTER 29/30 JUNE 1978

CHINA AND MACAO

1.

How do the Portuguese see the prospects for establishing diplomatic relations with China?

2. How do they propose to handle the question of Macao in the negotiations with the Chinese? We hope that the Portuguese will keep in close touch with us on this and, in particular, consult us before proposing any change in Macao's status. We also hope that they will avoid any reference to Hong Kong if they do get involved in discussions with the Chinese about the status of Macao and in any public comment on the subject.

3. [If necessary] A proposal to hand Macao back to China would put the Chinese in a very embarrassing position. They would not want to accept but it is possible that they might feel obliged to do so. Such a proposal would also be very unwelcome to the British Government: Business confidence in Hong Kong would be severely

or even a prospective change affected by a change

in the status

of Macao.

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Background

4. The Political Director at the Portuguese Foreign Ministry has informed HM Ambassador in Lisbon that the status of Macao is expected to be raised in the forthcoming negotiations on the establishment of Diplomatic Relations with China, and has asked for background information on the legal status of Hong Kong.

the Portuguese might offer to hand Macao back to China offer which the Chinese would find embarrassing and unwelcome.

an

5. We do not know whether the Portuguese are in fact contemplating an offer to return Macao to China. But the repercussions of such an offer on business confidence in Hong Kong are potentially very

serious.

attention.

It is therefore important to draw them to Dr Sa Machado's

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