TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 2

international commitments undertaken by HMG if we recognise Chinese sovereignty?

6.

Any long-term solution is likely to include a major concession by us on sovereignty (I am sceptical about the chances for the ingenious acknowledgement device in para 12). It is therefore of prime importance to have a clear picture of the problems which may be involved and the ways they could be solved. I see this as one of the most important parts of the whole paper.

7.

11

Secondly, I think we need to distinguish clearly between two different types of final solution which both fall short of either complete take-over or continuation of the status quo. One type is a Hong Kong controlled by China but with its own separate laws etc. and a mixed civil service. In my comments I have called this a Special Municipality" situation (similar to the way the British Concession in Hankow was run after 1927). The other is a Hong Kong admitted by us to be Chinese territory but accepted by both sides as being administered by Britain. In shorthand, this is the Macau situation. The draft paper tends to confuse the two. But the implications for Hong Kong and HMG are very different. Of the two, the Macau situation

is obviously preferable.

8.

I have not produced detailed comments on the Summary since these are subsumed by comments on the paper itself, particularly so far as paragraphs 11-12

The conclusions were, of the Summary are concerned.

I thought, right so far as they go. But they should include the thought that we may not be able to obtain our medium-term objective of dealing with land tenure without getting involved in a discussion about fundamentals. I hope also that, before the paper

is finalised, we will have got further in achieving the aim referred to in (e) of establishing more precisely the type of solution we wish to achieve.

9.

two points:

(i)

On the earlier part of the Summary I have only

We should not be so precise (para 3) about reaching agreement about land leases by the end of 1982 (see my telno 115 of 4 February). The object should rather be to reach agreement as soon as practicable. I am becoming sceptical about the willingness of the

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