TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 98

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DSR 11C

economy and a separate currency. China might accept

this but would find it hard to reconcile with their

need for any new system to underline their sovereignty

over Hong Kong. Economic development in Guangdong

Province could also lead to conflict of interest.

Hong

Kong's position in international economic organisations,

trade and air services agreements would have to be

accommodated.

d) Defence

e)

The role of the British Garrison, in a transition period

and possibly beyond would have to be resolved.

Legal

Problems would depend on the extent of participation by

Britain in the administration of the Territory under the

new system. The range could include:

i) the legacy of the 'unequal' treaties on which

present British rule rests.

How can these be

replaced with a new treaty?

ii) Reconciliation of continuing British adminis-

tration with a recognition of ultimate Chinese

sovereignty.

Dd 0532000 400 M 5/78 HMSO Bracknell

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