TNAG-1037-FCO40-1287-Future-of-Hong-Kong-1981 — Page 99

SECRET

- 7

DSR 11C

iii) The provision of a legal basis for a British

contribution to a new system of government

-

for

example a 'special zone' within the Chinese State

but under local control.

iv)

Legal problems during a transition period.

v) Legal problems of citizenship (see (a)).

CONCLUSIONS

13.

a)

b)

Movement by China on a long-term solution is not

at least

likely during the next 5 years.

In the medium term we should aim at a satisfactory

arrangement on land leases in the New Territories. This may not be possible without getting involved in a discussion of fundamentals.

We should not make concessions on sovereignty or a

Chinese representative without substantial under-

takings on China's part 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 every-

d)

thing possible to preserve confidence there.

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

Dd 0532000 400 M 5/78 HMSO Bracknell

SUCREO