TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 28

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DSR 11C

HONG KONG:

Introduction

OPTIONS FOR ACTION TO DEAL WITH A SLIDE OF CONFIDENCE OR A CHINESE INITIATIVE ON THE FUTURE OF HONG KONG

1. This paper considers possible action by HMG to meet

two contingencies:

a) a collapse of public and business confidence in Hong

b)

Kong;

readiness by the Chinese to discuss more concrete

ways of bolstering confidence.

It starts by looking at the Chinese attitude to the problem

and the actions which they might be prepared to take.

It then considers joint actions and unilateral actions on

the British side with tacit Chinese concurrence.

In (each

case the likelihood of the action being taken, its effects,

and residual problems are considered briefly.

The Chinese View

2.

Certain

The full picture of Chinese attitudes and long-term

policy on Hong Kong remains conjectural. There is consider-

able evidence of ignorance and misunderstanding of the

Hong Kong problem among the Chinese, particularly the

question of investor confidence, and even among those

officials who might be expected to be well informed.

elements, however, seem clear. The Chinese see Hong Kong in

its present form as useful to them now and in the immediate

future. But there are serious political inhibitions on

their accepting indefinite continuance of the status quo.

They neither accept nor have they abrogated the 19th Century

treaties on Hong Kong. Technically, it is open to them to

disregard 1997, but to do so would be politically difficult

as it would expose the leaders involved to the accusation of

'selling out' China to foreigners. In practice, and because of the public attention focussed on 1997, they could not

risk acquiescing in any formal or legal action that would

prolong British administration without a major political

concession on our part.

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