TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 48

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DSR 11C

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Territory's status (Option D) or statements by both sides that

Hong Kong is Chinese territory temporarily under British

administration with no intention by the Chinese to change

this for many years to come (Option C). The latter would

require a change in the treaty status of the Territory and

thus a technical renunciation of sovereignty by Her

Majesty's Government. The Chinese would almost certainly

expect a similar price for the first arrangement as well.

Prime Minister's Visit

10. The Prime Minister has provisionally earmarked September

1982 for a visit to China. It is important therefore that

she should be aware of the Hong Kong angle to this visit.

It would arouse expectations there that she will be seeking

a solution to the problem fo the future of Hong Kong. There

is considerable risk that the Chinese would not be prepared

to add to their earlier general assurances. This would bring

disillusionment in Hong Kong and itself affect confidence.

11. However, if the Chinese are prepared during the visit or

later on to have talks on Hong Kong, it is likely that one

major concession they would ask for would involve British

acknowledgement of their sovereignty over the Territory.

There are obvious political difficulties, but given that there

is no question of avoiding some change in 1997, this would in

our view be a price worth paying for the removal of the

uncertainty of 1997 and the maintenance of a form of British

administration for as long as possible beyond that time.

The departmental Legal Adviser has been consulted on the

legal aspects of such a concession. It would require an Act

of Parliament and some sort of agreement between the United

Kingdom and China.

While an important international agreement

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