TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 60

SECRET

-17-

Many of them would wish to leave and would demand permission to settle in the United Kingdom. There are at least an

additional 2 million with a legal right of abode in Hong Kong, many of whom will have children who are CBDTs by birth. HMG would be under very strong moral and political pressure to resettle them, both from the Hong Kong population themselves

and from neighbouring countries to which they might try to

move.

b)

c)

Administration of Hong Kong: During the transitional period,

the problems in paragraph 30(e) would arise. The continued

loyalty of senior members of the Hong Kong Government would

be vital. The Civil Service and Police, both local and

expatriate, would face a problem of divided loyalties. Many

would make demands on HMG for special treatment; indeed, this

has already been raised.

Their continued loyalty and presence

could not be relied on. Morale and recruitment would suffer.

When the new system took effect, the maintenance of confidence

would depend on the establishment of a credible administration.

This would not be easy for any of the three Governments involved,

but there might be pressure for HMG to play a continuing part

in this for the sake of stability.

Economic: A separate and efficiently-run economy and, almost

certainly, a separate currency will be needed if confidence is to

be maintained. Chinese leaders would recognise this but might

nevertheless maintain that a new system for Hong Kong should

reflect their sovereignty more explicitly. These considerations

could be hard to reconcile. Economic development in Guangdong

Province could also lead to conflicts of interest if, as is

likely, Hong Kong's economy and living standards continue to

SECRET

/outpace

Page 60Page 61