TNAG-1038-FCO40-1288-Future-of-Hong-Kong-1981 — Page 5

of Chinese statement could be ignored;

but:-

(iii) Effect. Would be too vague to have significant effect, even if coupled with A above. The clearer the implication of no change for a long time, the more beneficial the effect. But it would lack credibility unless coupled with agreement to action by HMG to take continuing powers of

administration.

Declaration by the Chinese that change would only occur with adequate warning; this defined as 15 years

(i) Likelihood. Difficult for Chinese to tie

themselves to a specific period. Becomes harder if selected period stretches beyond 1997. But Zhou Enlai did say to Sir Alec Douglas-home in 1972 that Chinese would take no surprise action over Hong Kong. Might be possible to build on this. Private hints

on length of warning easier for the Chinese than

public statements.

Matt Model S M

(ii) Problems for HMG. Almost certainly would be combined with Chinese demand that HMG recognise Chinese sovereignty over Hong Kong. Effect of this on legal status of Hong Kong and international agreements would need to be examined. Powers of continuing

administration would need to be dealt with but could

be tied to Chinese declaration. So could land leases.

Both the last two points become harder if Chinese

assurances about the period of warning are only private. Legal action on administration would have to be negotiated with Chinese. Parliamentary approval

necessary.

SECRET