TNAG-1030-FCO40-1280-Proposed-visit-by-Humphrey-Atkins--Lord-Privy-Seal--to-Hong--1981 — Page 82

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LORD PRIVY SEAL'S VISIT TO CHINA : 4 TO 8 JANUARY 1982

BRIEF NO 2A: FUTURE OF HONG KONG

Points to Make

LINE WITH CHINESE LEADERS

1.

Recall Lord Carrington's discussion with Chinese leaders in

April. Glad relations over Hong Kong are so good. Value practical

cooperation with Guangdong.

2.

As Lord Carrington explained, we face a legal problem over

1997. The future is a subject of growing discussion in Hong Kong

and uncertainty is bound to affect confidence. We have a common

interest in bolstering confidence and would be grateful for any

views the Chinese may have on ways of doing this,

3.

(Depending on Chinese response) Concern over the future is

growing. Chinese assurances have been of great value. Enough to

maintain confidence indefinitely but for the timing restraint of the

United Kingdom Order in Council which ends the current basis for

administration in the New Territories in 1997, Local and overseas

investors (including lawyers and accountants) are particularly

interested in ensuring continuity of law, currency and trade agreements affecting Hong Kong. Should aim to achieve this without prejudicing China's position on Hong Kong. Otherwise could be rapid dispersal of capital and industrial resources of Hong Kong

within next few years.

4.

(Provided that Prime Minister's visit has been agreed)

Mrs Thatcher who discussed Hong Kong in general terms with Chinese

leaders in 1979 will want to follow up when she visits.

5.

(If Chinese repeat assurances) We accept these. Problem is that public opinion and investors in Hong Kong may not, while faced

with uncertainty about future legal arrangements.

6.

(If Chinese ask for our specific views) Here to learn rather than go into detail. Of course we have been thinking but need to

know Chinese ideas. Should aim to recommend measures to maintain

confidence of investors in Hong Kong in the medium term.

7.

(If Chinese offer specific views) These views will be

carefully studied by my officials. The opening of a dialogue on the future of Hong Kong is to be welcomed.

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