TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 19

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7.

(ii)

Annex C:

(a)

(viii)

There needs to be some reference to the fact that the UK's constitutional position in Hong Kong has a substantial effect not only on the UK's trading in Hong Kong itself but also in its trading with China and the Western Pacific area. But unfortunately this could only be quantified if Hong Kong came under Chinese administration and the result then evaluated. It should also be noted that the beneficial effect of the present position would of course cease if Hong Kong became a bone of contention between China and the UK.

Options for a long-term solution

Option B.

Presumably what is being

considered here is formal public agreement with the Chinese. Any agreement on continuity will have to be public knowledge. Agreed that the prospects are doubtful (indeed very doubtful). But if it happened this result would be very much more in our interest than suggested by the rather negative points listed under "implications".

(b) Option C:

(c)

(i)

(ii)

(iii)

Option D. (para 12

This should cover continuation with Chinese acquiescence but no formal agreement. Chinese agreement could not be wholly tacit.

The problem would be to find a form of maintaining legal authority to administer which would be acceptable to the Chinese. They would almost certainly at least demand a quid pro quo.

Implications. If it came off it probably would be sufficient to maintain confidence. There would be no separate problem of the legal basis of rule; that would have to be covered as part of the arrangements for continuation.

I realise that the paper argues that acknowledgement of China's position on sovereignty is not the same as accepting it. But the distinction is, to a layman, very thin.

At the least it would

raise legal doubts about the status of Hong

Kong in the same way as an outright recognition of Chinese sovereignty.

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/contd.