TNAG-0902-FCO40-1112-Implications-for-Hong-Kong-of-changes-in-British-nationality-1979 — Page 176

have

a number

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Addate of unfortunate consequences. To begin with,

it wil certainly lead to unwelcome speculation about the

Territory's future at the very time when we are engaged in

Government delicate negotiations with the Chinese aimed precisely at removing any such doubts. This speculation could in turn create uncertainty and undermine the business confidence that

is absolutely vital to the Territory's very existence.

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A slump in Hong Kong's economy would not only cause suffering to the people of Hong Kong (for whose well- being the British Government is of course responsible), but would also affect British interests. Hong Kong is second only to Japan as a market for British exports in Asia outside the Middle East, and there are substantial British investments in Hong Kong. We also have a contingency commitment to Hong Kong Government pensioners that could run into thousands of millions of pounds, and, notwithstanding the formal position on rights of entry into the UK, we would certainly face some very embarrassing immigration problems if the continuation of Hong Kong in its present form were to be called into question.

There are also political dimensions to the problem.

Our relations with the Chinese could be jeopardised, since they have if anything an even stronger interest than we have in maintaining the prosperity of Hong Kong. They would not

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understand our introducing apparently unnecessary changes

Might

that wt put that a prosperity at risk. In Hong Kong itself,

what would be seen as a demonstration of Britain's failing interest in the Colony could upset the delicate balance that

the Government have achieved with the Communist left there.

I realise that this scenario puts the case at its

dramatic worst, and that it is unlikely that a mere change

in title would in itself lead to the collapse of Hong Kong as

a self-sustaining free enterprise economy. But the risk that the change could start a snow-balling process as described above is nonetheless real. It seems to us therefore that the Governor is right to argue that, since there is apparently no UK interest at stake, Britain should not insist on exposing

Hong Kong to this risk.

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I should make it clear that the Governor is not proposing that the title CUKC should be retained for all those who now come under this heading, with the new British Citizen- ship and British Overseas Citizenship as sub-categories for

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