TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 40

SECRET

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b) Hong Kong represents a continuing defence commitment;

c) responsibility for the Territory affects our international

finter

relationships, particularly with China, but also in the

trade field, eg over textiles.

Taking Steps to Leave Hong Kong

9. Apart from international repercussions which would not in

themselves be conclusive the difficulties would be:

i) Our obligations to the population;

ii) Probable demands for substantial immigration to

Britain and other countries;

iii) Collapse of business confidence;

iv) Losses by British and foreign firms;

v) Difficulties of administration during a transitional

period.

Effect on loyalty of Civil Service and police.

Problems of law and order.

10. The balance is strongly against taking the initiative to

leave.

Possible Chinese Moves

ན་

11. From a range of options on a future system for Hong Kong the

Chinese might work towards a form of 'special zone' within China

but with a separate economic system or currency. But it is too

early to forecast their moves at this range.

IMPLICATIONS FOR HMG

12. Any special arrangement' for Hong Kong would cause some of

the following problems for HMG, both in the transition period

and in the long-term depending on the degree of British involve-

ment:

SECRET

/a)

1.

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