TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 96

1.

i

SECRET

4

DSR 11C

ii) Probable demands for substantial immigration to

Britain;

iii) Collapse of business confidence;

iv)

Losses by British and foreign firms;

10.

v)

Difficulties of administration during a transitional

period. Effect on loyalty of Civil Service and

police. Problems of law and order.

strongly

The balance is/against taking the initiative to leave.

Possible Chinese Moves

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

the Chinese might work towards a form of 'special zone'.

within the Chinese state but with a separate economic system

or currency.

But it is too early to forecast their moves

at this range.

IMPLICATIONS FOR HMG

12.

Such a solution would cause many problems for HMG, both

in the transition period and in the long term depending on

the degree of British involvement, in the new system.

They

would arise in the following areas:

a) Citizenship and Immigration

SPARK

Dd 0532000 400M 5/78 HMSO Bracknell