TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 49

DSR 11C

SECRET

-5-

of this kind would normally be embodied in a formal Treaty,

it might be possible for the United Kingdom to effect its

renunciation of sovereignty (with continuing British

administration as hitherto) on the basis of a public endorse-

ment by China. Provided that Chinese acquiesence was clear

(and could be made public if necessary) the change would also

not prevent Hong Kong British Dependent Territories' Citizens

from retaining their nationality status or their children from

acquiring it. Nor would it invalidate international treaties

or the continuance of Hong Kong's separate currency.

12.

The Secretary of State may wish to consider in discussion

with the Lord Privy Seal, the PUS and Sir E Youde how this

might best be put to the Prime Minister and to other members

of the Cabinet. It would be helpful in any case to get

Mrs Thatcher's agreement to a visit in September 1982 and to

warn her of the problems which the future of Hong Kong might

pose. In addition, Lord Carrington might suggest putting the

contingency paper to OD under a covering note. The attached

drafts cover these points.

SECRET