TNAG-0753-FCO40-957-Future-of-Hong-Kong-1978 — Page 8

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Annese c

Possible Chinese demands on Hong Kong

We

Our proposal about leases is drafted in a way that would allow the Chinese to deal with it in isolation;

hope they will. However, they might not. This note covers possible demands which the Chinese might make in return for their acceptance of our plan. In each case the "response" gives a skeleton version of the way in which we should reply to the Chinese demand. The note makes the following

assumptions about our own objectives:

(i) we wish to obtain Chinese approval for our tactic

on leases without, if possible, giving anything in return, since in our view the action proposed is in the mutual interest of China and HMG.

Their approval will have to include agreement to us making some public reference to their having been informed of what we are doing and having raised no objection;

(ii)

(iii)

we wish to erode the significance of 1997 but without substituting a specific alternative date;

we would like from the Chinese assurances (public if possible) about their acceptance of the status quo for a long time to come. We realise that these would have to be in general terms but would look for formulae which made the commitment as

long term as possible.

Chinese demands and our response

2.

Specific economic facilities.

The Chinese use Hong

Kong for direct transhipment of goods by sea, rail and air. They might say that, since the land is really theirs, they see no reason why they should pay an inflated price for it, and

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/contd...