TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 59

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beyond 1997. But they will not allow matters to drift indefinitely: Deng Xiaoping remarked in 1979 that a political solution might emerge before 1997; in addition in May 1980, Vice-Premier Gu Mu told the

Hong Kong Financial Secretary that the solution for Hong Kong 'may be

for China to find', though 'the process of discovering it is a matter

for reflection on both sides'.

33.

There are some indications that the Chinese Government may

envisage a variation on the theme of a special zone for Hong Kong, within the Chinese state but with a separate currency, having a

tributary' relationship to Peking. It is too early to forecast 16

years ahead, but two broad lines of development stand out. These are

described at Annex A as option (e), maintenance of British administration

with an acceptance of Chinese sovereignty and some degree of influence, having similarities to the Portugese position in Macao, and option

(h), 'Special Municipality' status within China, but with the

preservation of Hong Kong's legal system, the Hong Kong Dollar, the

capitalist economy and an expatriate share in the administration.

IMPLICATIONS FOR HMG

34. Any solution, and the transition period leading to it, would pose

some or all of the following major problems:

a)

Citizenship and Immigration: The status of Hong Kong's population

would have to be settled with China and the position of Citizens

of the United Kingdom and Colonies (CUKCs) (by then Citizens

of the British Dependent Territories (CBDTs)) agreed. There are

at least 2.6 million of them now; by 1990 the figure is likely

to exceed 3 million. The PRC does not recognise Hong Kong

British passports. But these provide a very important

psychological link for thse people with the United Kingdom.

this link were cut, it would be difficult to maintain confidence.

If

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