TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 42

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would improve confidence in Hong Kong, eg on the land

lease issue. We should not agree to Chinese participation

in the administration of the Territory;

c) in the longer term we should not take any unilateral

initiative to leave Hong Kong. We should do everything

possible to preserve confidence there;

d) It is too early to forecast what form a long-term solution

would take. For HMG the best option would be the

continuance of the status quo beyond 1997 by agreement

with the Chinese but the latter are most unlikely to

agree to this. The Chinese may have a general long-term

aim of establishing Hong Kong as a 'special zone' under

their administration but with separate economic status.

This would be unlikely to provide sufficient reassurance

to the international business community. The solution

may be somewhere between the two extremes;

e) Any change from the status quo would raise serious

problems for HMG. The most difficult would probably

be pressure for Hong Kong people to come to the UK;

f) The position should be kept under continuous review.

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