TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 136

DRAFT OD PAPER

SECRET

DSR 11C

FUTURE OF HONG KONG CONTINGENCY PLANNING AND TACTICS

1.

Attached paper outlines problem of Hong Kong's future

Probable

with approaching end of New Territories Lease.

Chinese position favours status quo but unwilling to prejudge

final solution by early negotiation with British. Nevertheless

concern growing in Hong Kong and possible threat to commercial

and other confidence there. Major political consequences for

HMG.

2.

Paper outlines possible action to take if confidence

begins to slide quickly. Given Chinese attitude, unlikely

to obtain definitive solution but might gain more

specific reassurances, eg agreement to long-term notice of

change in status of Territory.

Possible need to requite

this with British renunciation of sovereignty over whole of

Territory. Legal implications being examined.

3.

Possible visit by Prime Minister in September 1982.

Impossible to avoid mentioning subject and expectations of

solution will be raised in Hong Kong and elsewhere. Risk of

obtaining no more than repetition of earlier Chinese

assurances. Objective should be to remind Chinese of

practical problems and risk of loss of confidence, aiming

at public statement after visit with more precise assurances.

These would probably have to reserve long-term Chinese position

but might acknowledge importance of maintaining status quo

and need for long-term advance warning of change.

4.

Chinese will need some advance notice of our ideas

without being given specific proposals which they might feel

obliged to reject in advance. The Lord Privy Seal could

discuss the problem in general during his visit in January

SECRET

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